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Intel (INTC) earnings Q2 2022

Intel (INTC) earnings Q2 2022
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Intel CEO Pat Gelsinger pictured during the “Chips for Health” event at Hotel Grischa at the World Economic Forum in Davos, Switzerland, on May 24, 2022.

Eric Lalmand | belgian magazine | AFP | fake images

Intel shares fell more than 10% in extended trading on Thursday after the chipmaker reported second-quarter results and quarterly and full-year guidance that missed analysts’ expectations.

Here’s how the company did it:

  • Profits: 29 cents per share, adjusted, vs. 70 cents a share as analysts expected, according to Refinitiv.
  • Income: $15.32 billion, versus $17.92 billion as analysts expected, according to Refinitiv.

Intel’s revenue was down 22% year over year in the quarter ended July 2, according to a statement. The company ended the quarter with a net loss of $454 million, compared to $5 billion in profit in the prior year quarter. Gross margin fell to 36.5% from 50.4% in the previous quarter.

“This quarter’s results fell short of the standards we have set for the company and our shareholders,” CEO Pat Gelsinger was quoted as saying in the statement. “We must and will do better. The sudden and rapid decline in economic activity was the main driver, but the shortfall also reflects our own execution problems.”

Regarding guidance, Intel requested 35 cents in adjusted earnings per share on $15 billion to $16 billion in revenue. Analysts surveyed by Refinitiv had expected 86 cents in adjusted earnings per share on $18.62 billion in revenue.

Intel lowered its expectations for the full year. He said he now sees full-year adjusted earnings of $2.30 per share and revenue of $65 billion to $68 billion. The guidance from three months ago was $3.60 in adjusted earnings per share on $76 billion in revenue. Analysts surveyed by Refinitiv had expected $3.42 a share in earnings and $74.34 billion in revenue.

Small and medium-sized businesses have slowed down buying computers, but the company has held its own, David Zinsner, Intel’s chief financial officer, told CNBC in an interview. Still, the updated forecast takes into account weak economics that could cause organizations to delay PC refresh cycles.

“We think we’re at the bottom,” Zinsner said, adding that price increases and a seasonal improvement in the fourth quarter should help Intel bring its gross margin back to around 51% to 53%.

During the second quarter, Intel’s Client Computing Group, which includes PC chips, generated $7.7 billion in revenue, down 25% and considerably less than the consensus estimate of $8.89 billion among analysts surveyed by StreetAccount. Earlier this month, tech industry researcher Gartner said PC shipments were down almost 13% during the quarter. in a presentation To investors, Intel noted that demand for PCs is “slipping” in the consumer and education markets and said that higher unit costs reduced the segment’s operating income.

Intel’s newly established data center and AI segment, which includes field-programmable server chips, accelerators, memory, and gate arrays, contributed $4.6 billion in revenue, down 16%, below consensus. StreetAccount of $6.19 billion. Competitive pressure hurt the unit’s revenue, Intel said.

Intel’s new Network and Edge segment, which houses the company’s networking products, generated $2.3 billion in revenue, up 11% and slightly more than StreetAccount’s consensus of $2.27 billion.

During the quarter Intel thrown out Habani Gaudi2 Artificial Intelligence Training Chips Racing from nvidia A100 graphics cards. and intelligence called Congress move forward with federal legislation to support semiconductor manufacturing in the US so that it can proceed with a plant in Ohio. Earlier on Tuesday, the US House of Representatives. passed the Chips and Science Actsending the bill to President Joe Biden.

Excluding after-hours movement, Intel shares are down about 23% so far in 2022, while the S&P 500 Index is down less than 15% over the same period.

Executives will discuss the results with analysts in a conference call beginning at 5 pm ET.

This story is developing. Please check for updates.

Correction: An earlier version of this story misrepresented Intel’s net loss for the quarter. It was $454 million.

CLOCK: Intel will have to spend this money and any help it gets from the government helps, says Bernstein’s Rasgon.

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