Intel Corp (Nasdaq: INTC) reported lower-than-anticipated fiscal 2022 fourth-quarter earnings and revenues. The chip maker also stated that it expects a net loss in the first quarter of fiscal 2023. Following the poor results and weak outlook, the share price of Intel fell 6.41%, or $1.93, to close at $28.16 in the final trading session of last week.
Santa Clara, California-based Intel reported fourth-quarter revenues of $14.04 billion, a decline of 32% from $20.53 billion in the similar quarter last year. The reported figure reflects the fourth successive quarter of declining sales as the overall market for personal computers reverses the boom caused by COVID-19.
For the fourth quarter, which ended December 31, 2022, the company swung to a net loss of $664 million, or $0.16 per share, from a net profit of $4.62 billion, or $1.13 a share, in the quarter ended December 25, 2021.
Excluding acquisition-related adjustments, share-based compensation, patent settlements, optane inventory impairment, restructuring and other charges, losses on equity investments, and losses from divestiture, among others, Intel posted a 4Q 2022 non-GAAP net income of $394 million, or $0.10 per share, compared with a non-GAAP net profit of $4.72 billion, or $1.15 per share, in 4Q21.
Analysts surveyed by Refinitiv had anticipated the company to report adjusted earnings of $0.20 per share on revenues of $14.45 billion.
Commenting on the results, Pat Gelsinger, Intel CEO, stated “Despite the economic and market headwinds, we continued to make good progress on our strategic transformation in Q4, including advancing our product roadmap and improving our operational structure and processes to drive efficiencies while delivering at the low-end of our guided range.”
Segment wise,
- Client Computing Group (CCG) revenues plunged 36% y-o-y to $6.625 billion and missed the StreetAccount estimate of $7.68 billion.
- Data Center and AI (DCAI) revenues were $4.30 billion, down 33% from last year but surpassed Wall Street’s estimate of $4.17 billion.
- Network and Edge (NEX) inched down by 1% to $2.06 billion and missed the StreetAccount estimate of $2.26 billion.
- Mobileye revenues surged 59% y-o-y to $565 million.
- Accelerated Computing Systems and Graphics (AXG) revenues were $247 million, an increase of 1% on a year-on-year basis.
- Intel Foundry Services (IFS) were $319 million, up 30% from the comparable period last year.
Looking ahead, the company stated that it expects an adjusted net loss of $0.15 per share in the first quarter. Intel also projects first-quarter revenue of between $10.50 billion and $11.50 billion. Analysts surveyed by Refinitiv had anticipated earnings of $0.24 per share on revenues of $13.93 billion.
Under-load costs, which accumulate due to the underutilization of factories, resulted in a gross margin loss of 220 basis points in 4Q 2022. As per Intel’s CFO, David Zinsner, the gross margin loss is expected to widen by 400 basis points in the first quarter.
Back in January, the company stated that it had increased the lifetime of certain equipment from five to eight years, which would boost gross profit by $2.60 billion in 2023. This is in addition to the $3 billion cost-saving plan announced for 2023 by the company in October.
Looking ahead, the company stated that it expects an adjusted net loss of $0.15 per share in the first quarter. Intel also projects first-quarter revenue of between $10.50 billion and $11.50 billion. Analysts surveyed by Refinitiv had anticipated earnings of $0.24 per share on revenues of $13.93 billion.
The poor quarterly earnings and weak Q1 outlook are expected to keep the stock price of Intel range-bound with a slight bearish bias in the short term.
The historical price chart indicates that the stock of Intel is facing resistance at 30. The next support is anticipated only near 25. Additionally, the stock is trading below its 50-day moving average, while the Chaikin money flow indicator is showing a negative reading. Therefore, we anticipate the share price of Intel to remain in a downtrend in the near term.
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