By Aaron Pressman
May 8, 2019

Intel’s new CEO Bob Swan continued his campaign to reset expectations about the chipmaking giant, but with limited success.

Hosting its first investor day in more than two years, Intel invited Wall Street analysts and fund managers to its Santa Clara, Calif. headquarters for three hours of presentations and speeches. The aim was to convince investors that Intel has a sound long-term plan to compete with Nvidia, Advanced Micro Devices, and others that have started to steal away the chipmaker’s dominant position.

Swan spoke first, and by the time he was done, Intel’s shares had fallen 2.5% to $49.24. The stock is still up 6% for the year, but that lags the 15% gain in the S&P 500 Index, not to mention the 47% rise at AMD (amd) and 30% jump for Nvidia (nvda).

In a response that typified Wall Street’s reaction to the day, CFRA Research analyst Angelo Zino afterwards called the presentations “disappointing” and the financial guidance from Intel “lackluster.”

Intel has been struggling for the past few years, as it largely missed out on the smartphone revolution and has struggled to finalize a new generation of chip manufacturing technology. Swan’s predecessor, Brian Krzanich, was pushed out last year amid the sagging performance and a “consensual relationship” with another Intel employee. Then in April, Swan disclosed that Intel would miss its previous revenue forecast by $2.5 billion in 2019.

“I do want to acknowledge the present,” the soft-spoken CEO said in his opening presentation on Wednesday. “We let you down and we let ourselves down…we’re a team built on credibility and we know we have to earn and maintain your credibility.”

Swan, Intel’s former CFO who was named to the top job after a seven-month search, said he’s taking a hard look at some of Intel’s efforts started over the past few years to boost growth. Already, Intel has shut its smartphone modem program, the sole source of chips for Apple’s (aapl) iPhone line up in 2018. Swan said he’s also evaluating whether to keep funding a memory chip effort that may never be as profitable as Intel wants.

Intel ended its smartphone modem effort after Apple settled with rival modem chipmaker Qualcomm (qcom) and agreed to buy its chips. In the end, Swan said he “didn’t see a path to make money.”

The memory chip effort, which relies on a cutting-edge technology known as 3D NAND, will sink back into the red this year after attaining profitability in 2018, he said. “We’re really evaluating the continued progress in NAND,” he said, adding that the company won’t spend any more money to expand its memory chip making capacity this year.

Making such tough decisions may please Wall Street, and Intel’s stock actually crept up briefly on Wednesday after Swan said he may chop the memory business. Analyst Joe Moore at Morgan Stanley wrote later that he’d like to see Intel focusing more on its core business making chips for PCs and servers. “Giving data center customers a better reason to refresh their existing data centers will likely have a higher payoff than the large inorganic investments where Intel has no real edge,” he wrote after the event.

But the next section of Swan’s talk was likely the most disappointing element for investors.

Over the next three years, Intel will increase its revenue by “low single digit” percentage points per year while its gross profit margins may decline, Swan said. Earnings per share would grow at about the same rate as revenue.

Immediately after the forecast, Intel’s stock slipped. “While we do not necessarily disagree with the path they are setting themselves on, it may prove to be a tough one for investors while they traverse it,” longtime Intel analyst Stacy Rasgon at Bernstein Research noted after the presentation. Intel’s gross margin could sink to the lowest level in a decade or more given the new forecast, Rasgon wrote.

Swan and other Intel (intc) executives also tried to promote some upcoming innovations, but repeated previously disclosed schedules for PC and server chips that will use a new manufacturing technology. The new chips will arrive in consumer devices by the end of the year and for servers and cloud providers in the first half of 2020.

(This story was updated on May 9 with analyst comments.)

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