Intel Earnings (INTC) 1st quarter 2022

Shares of Intel fell 4% in extended trading on Thursday, after issuing a lower-than-expected forecast for the second quarter of the company’s fiscal year.

See how the company did it:

  • Profits: 87 cents per share, adjusted against 81 cents as expected by analysts, according to Refinitiv.
  • Income: $ 18.35 billion, compared to $ 18.31 billion as expected by analysts, according to Refinitiv.

Intel Revenue fell 7% year-on-year in the quarter ended April 2, according to a statement. Intel’s gross profit margin fell to 50.4% from 55.2%. The fiscal quarter had 14 weeks.

“We expect the industry to continue to face challenges at least until 2024 in areas such as tool capacity and availability,” Intel CEO Pat Gelsinger told analysts at a conference call.

Intel’s Client Computing Group, which includes computer chips, generated $ 9.29 billion in revenue, down 13% and below the $ 9.42 billion consensus estimate among analysts surveyed by Refinitiv. Research firm Gartner estimated that PC shipments fell 6.8 percent during the quarter, and on Tuesday Microsoft said it saw strength in the corporate PC market, boosting sales of Windows licenses from device makers.

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Sales of Intel chips for desktops and laptops fell, with lower consumer and education demand and Apple turning to its own PC processors. The fact that appliance manufacturers have reduced their inventories to meet demand and align with other components has not helped.

The operating margin of the industry was reduced to 30% from 40%. The management said that the operating income decreased due to its transition to next generation chip architectures and the investments it will make in its road map.

Intel upgraded its reporting structure in the quarter and unveiled a section called Datacenter and AI, which includes chips, some accelerators, memory and programmable gate arrays. Revenue from the department rose 22% to $ 6.03 billion. The company cited strong demand from data center operators and large-scale businesses.

In the quarter, Intel said a server chip codenamed Granite Rapids would be released in 2024 instead of 2023. The company said it would buy foundry Tower Semiconductor and announced plans for chip plants in Germany and Ohio. Former Micron Chief Financial Officer David Zinsner has become Intel Chief Financial Officer, replacing George Davis, who has held the position for three years.

In terms of guidance, Intel sought adjusted second-quarter earnings per share of 70 cents and $ 18.0 billion in revenue. Analysts polled by Refinitiv expected 83 cents in adjusted earnings per share for revenue of $ 18.38 billion.

For the entire fiscal year, Intel increased its adjusted earnings guidance by 10 cents to $ 3.60 per share with revenue of $ 76 billion. Analysts polled by Refinitiv were looking for adjusted earnings of $ 3.50 per share and $ 75.78 billion in revenue.

Inventories challenges should persist in the second quarter, but decline in the second half of the year, Zinsner said. Covid lockdowns in China have fueled supply fears and inflation could cut PC purchases year-round, Zinsner said.

Intel’s goal is to introduce its server chips codenamed Sapphire Rapids “substantially faster” than it increased the chips with the codename Ice Lake that became available in 2019, Gelsinger said. Every large-scale data center company has queued up for that, he said.

Despite the after-hours movement, Intel shares have fallen about 9% since the beginning of 2021, while the S&P 500 has fallen about 10% over the same period.

I’M WATCHING: Bernstein’s Stacy Rasgon says Intel is a five-year story

Intel Earnings (INTC) 1st quarter 2022

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