Intel (INTC-US) After the market closed on Thursday (26th), it announced that the last quarter’s financial report fell short of expectations, and issued a pessimistic financial forecast. 9%.
Intel CEO Pat Gelsinger said in a conference call that the company did not provide a full-year financial forecast due to the current environment full of uncertainties, and it is expected to face continued economic headwinds until at least the first half of this year.
“We stumbled. Yes, we lost market share, we lost momentum. We think we’ll stabilize this year,” he said, acknowledging that Intel’s data center market share was lost to rival AMD (AMD-US) erosion.
Gessinger revealed that customers are clearing inventory. “We are seeing one of the largest inventory corrections in the history of the industry taking place, and it will have a significant impact on our first quarter earnings forecast.”
Intel closed up 1.31% to $30.09 per share on Thursday. After the announcement of weaker-than-expected earnings and pessimistic financial forecasts, the stock price fell 9.7% after hours. Share prices of peers also fell after hours, with Super Slightly down 3.2%, Huida (NVDA-US) fell 2.4%.
2023 Q1 forecast vs Refinitiv analyst forecast
- Revenue: $10.5 billion to $11.5 billion vs $13.93 billion
- (Non-GAAP) EPS: -15 cents vs 24 cents
Q4 (Non-GAAP) earnings key data vs Refinitiv expectations
- Revenue: $14.04 billion (-28% year-over-year) vs $14.45 billion
- Gross profit margin: 43.8% (55.8% in the same period last year)
- Profit margin: 4.3% (28.2% in the same period last year)
- EPS: 10 cents (-92% annualized) vs 20 cents
The financial report shows that Intel’s Q4 revenue decreased by nearly 30% compared with the same period last year, and the adjusted EPS was almost halved compared with the same period last year, both of which were lower than expected.
David Zinsner, Intel’s chief financial officer, said in a conference call that the cost of underutilization of factories dragged down the decline in gross profit margins last quarter. After the current inventory adjustment period, the load will increase.
Segment revenue vs StreetAccount forecast
- Client Computing Group (CCG): $6.6 billion (-36% year-over-year) vs $7.68 billion
- Data Center and Artificial Intelligence Business (DCAI): $4.3 billion (down 33 percent year-over-year) vs $4.17 billion
- Network and Edge Business (NEX): $2.1 billion (down 1% yr) vs $2.26 billion
- Accelerated Computing and Graphics (AXG): $250 million (up 1% year-over-year)
- Autonomous driving business Mobileye: $570 million (up 59% year-over-year)
- Foundry Services (IFS): $320 million (+30% YoY)
In the client computing sector, which includes PC chips, revenue fell 36% year-on-year to US$6.6 billion last quarter, missing market expectations. Intel said that the decline in demand mainly occurred in the consumer and education markets, and customers therefore lowered their inventory levels.
Intel previously forecast total PC market shipments of 270 million to 295 million units in 2023, but the company now predicts total shipments will be at the lower end of that range.
Revenue in the network and edge business fell 1% year-over-year to $2.1 billion last quarter, also missing expectations.
The data center and AI divisions, which include server chips, memory and FPGAs (field programmable logic gate arrays), beat consensus estimates in revenue last quarter, but were still down 33% from a year ago due to competitive pressure and market size slide.
For the full year, Intel’s revenue in 2022 will reach US$63.1 billion, down 16% from 2021, and its adjusted EPS will be US$1.84, which is much lower than the US$5.30 in 2021.
