Intel posts largest ever quarterly loss in company history, coupled with a 36 percent decline in sales. But share price rises
Intel has posted dire first quarter financial results, but Wall Street took cheer at signs of a potential turnaround in the chip giant’s fortunes.
Intel on Thursday posted the largest quarterly loss in its company history, coupled with a 36 percent slide in revenues. Yet shares in the firm rose 8 percent after CEO Pat Gelsinger said the PC market was stabilising after multiple quarters of decline.
However analyst house Gartner earlier this week forecast global semiconductor revenue to decline 11.2 percent in 2023.
Into this tough economy, it is perhaps not surprising then that Intel’s latest financial results are so dire.
Intel for the first quarter ending 1 April, posted a net loss of $2.77bn (or 66 cents per share), compared to a net profit of $8.1bn (or $1.98 per share) in the same year-ago quarter.
The significant decline was due to a rapid fall in economic activity and a slowdown in demand.
Yet that loss beat Wall Street expectations, after Refinitiv consensus had expected 15 cents per share.
There was equally bad news on the revenue front, as sales slumped 36 percent to $11.7, down from $18.4bn a year earlier.
Refinitiv consensus had been $11.04bn expected, meaning that once again Intel beat expectations.
Looking forward for the second quarter, Intel expects to lose 4 cents per share on revenue of $12 billion. That forecast is slightly shy of Refinitiv expectations for earnings of 1 cent per share on $11.75 billion in sales.
“We delivered solid first-quarter results, representing steady progress with our transformation,” said Pat Gelsinger. “We hit key execution milestones in our data centre roadmap and demonstrated the health of the process technology underpinning it.”
“While we remain cautious on the macroeconomic outlook, we are focused on what we can control as we deliver on IDM 2.0: driving consistent execution across process and product roadmaps and advancing our foundry business to best position us to capitalise on the $1 trillion market opportunity ahead,” said Gelsinger.
Despite this, the results show the scale of the challenge facing Intel.
This first quarter results are it’s fifth consecutive quarter of falling sales and the second consecutive quarter of losses. It is also Intel’s largest quarterly loss of all time, surpassing out the fourth quarter of 2017, when Intel lost $687 million.
It was back in March 2021, soon after Pat Gelsinger took over at Intel, that he announced the turnaround plan for the chip giant, known as IDM 2.0.
The central thrust of the turnaround plan was to open up Intel’s factories as foundries, namely chip factories, that can make chips for other companies.
Intel hopes that by 2026 that it can manufacture chips as advanced as those made by TSMC in Taiwan, and it can compete for custom work such as Apple’s A-series chips in its iPhones. Intel was quoted by CNBC as saying on Thursday it was still on track to hit that goal.
“We still have more work to do as we reestablish process, product, and cost leadership, but we continue to provide proof points each quarter,” Gelsinger said on an earnings call.
But Intel’s results showed that its traditionally strongest product line continues to struggle.
Intel’s Client Computing group reported $5.8 billion in revenue, down 38 percent on an annual basis.
Intel’s server chip division, under its Data Center and AI segment, suffered an even worse decline, falling 39 percent to $3.7 billion.
“We are seeing increasing stability in the PC market, with inventory corrections largely proceeding as we had expected,” Gelsinger reportedly said. “However, server and networking markets have yet to reach their bottoms as cloud and enterprise remain weak.”
Its smallest full line of business, Network and Edge, posted $1.5 billion in sales, down 30 percent from the same time last year.
Despite this there was a solid performance by Mobileye, which went public last year but is still controlled by Intel. Mobileye makes systems and software for self-driving cars, and reported 16 percent sales growth to $458 million.