Intel slips in spite of big after-hours earnings beat; Apple paying $1 billion for majority of its modem chip business

Intel Corp. (NASDAQ:INTC) shares slipped on Friday, in spite of a 5% after-hours boost on Thursday following a big earnings beat by the chip maker, driven by a surprise advance in its PC business, and earlier news that Apple Inc (NASDAQ:AAPL) is purchasing the majority of Intel’s modem chip business in a deal valued at $1 billion.

Intel reported adjusted earnings of $1.06 a share on revenue of $16.51 billion, beating forecasts for earnings of 89 cents on revenue of $15.68 billion.

The chip maker’s biggest segment, its client-computing or traditional PC business, saw revenue rise by 1% to $8.8 billion when analysts had expected a 6.8% decline.

Intel forecast full-year adjusted earnings of $4.40 a share on revenue of about $69.5 billion for the year., an increase on April’s guidance of $4.35 a share on revenue of about $69 billion, although analysts had been looking for 2019 adjusted earnings of $4.50 a share on revenue of $71.04 billion.

In New York trade on Friday, Intel shares were 0.7% lower at $51.80 following the Thursday after-hours advance.

Modem chip deal big move

Earlier on Thursday, Apple had unveiled the modem chip deal which will see about 2,200 Intel employees join the iPhone maker, along with a transferral of intellectual property, equipment and leases.

Modem chips connect devices like the iPhone to wireless data networks. Previously Apple has relied on outside suppliers for the part.

Combined with its existing portfolio, the deal means Apple will have 17,000 wireless technology patents, ranging from cellular communication standards to modems.

After the deal, Intel will retain the right to develop modems for non-smartphone applications, such as PCs, industrial equipment and self-driving cars.

Shares in Apple were 0.9% higher at $207.96 on Friday with the tech giant set to report its latest quarterly earnings next week.

Story by ProactiveInvestors