Intel shares fell sharply on Thursday after the company reported weak quarterly earnings and warned investors of further losses in the coming quarter. The chipmaker reported a 16% drop in revenue compared to the previous year, and a net loss of $2.2 billion.
Intel’s weak earnings came as the company continues to struggle with a downturn in the PC market, as well as increasing competition from rival chipmaker AMD. The company is also under pressure to make up for lost ground in the mobile chip market, where it has lagged behind its competitors.
In addition to the weak earnings, Intel also revised its guidance for the first quarter of 2016, predicting that it will post a loss of up to $1.1 billion. This is significantly worse than the prior guidance of a $300 million profit.
The weak earnings and outlook have investors worried that Intel will have difficulty recovering from the downturn in the PC market. The company is still the leader in the processor market, but it has been unable to capitalize on the mobile boom and has been slow to develop innovative products in the face of stiff competition.
Despite the gloomy outlook, Intel shares have been on the rise since the start of the year, as investors bet on the company’s ability to bounce back. However, Thursday’s earnings and guidance suggest that a turnaround is still some way off, and as a result Intel shares dropped sharply in response.