Pat Gelsinger, CEO of Intel Corporation, delivered a compelling testimony during the Senate Commerce, Science, and Transportation hearing on semiconductors titled “Developing Next Generation Technology for Innovation” in the Russell Senate Office Building on Wednesday, March 23, 2022.
Image Credit: Tom Williams | CQ-Roll Call, Inc. | Getty Images
Intel has released its second-quarter earnings, showcasing a return to profitability after facing losses for two consecutive quarters. Additionally, the company has presented a forecast that surpasses expectations.
Following the release of this news, Intel’s shares rose by 7% in after-hours trading.
Let’s dive into the details of Intel’s performance for the quarter ending July 1, comparing the results to Refinitiv consensus expectations:
- Earnings per share (EPS): Adjusted EPS of $0.13, which exceeds Refinitiv’s projection of a 3 cents loss per share.
- Revenue: $12.9 billion, surpassing Refinitiv’s forecast of $12.13 billion.
Looking ahead, Intel expects adjusted EPS of $0.20 and revenue of $13.4 billion at the midpoint for the third quarter. This exceeds analyst expectations of 16 cents per share on $13.23 billion in sales.
The company reports a net income of $1.5 billion, equivalent to earnings of $0.35 per share for the quarter. In comparison, the same period last year showed a net loss of $454 million or a loss of 11 cents per share.
Intel’s CFO David Zinsner attributes the better-than-expected report to the progress made in cutting costs. This year, Intel has already reduced expenses by $3 billion. The company has taken various measures to achieve this, including a reduction in the dividend and plans to save $10 billion per year by 2025, which may include layoffs.
Despite the company’s success in returning to profitability, revenue declined to $12.9 billion from $15.3 billion YoY, marking the sixth consecutive quarter of declining sales.
The Client Computing group, responsible for laptop and desktop processor shipments, faced a 12% decrease YoY, resulting in $6.8 billion in revenue. This decline can be attributed to the overall slump in the PC market over the past year.
The Data Center and AI division, which focuses on server chips, experienced a 15% decline in sales, amounting to $4.0 billion.
The Network and Edge division, which offers telecommunications networking products, saw a 28% drop in sales, reaching $1.4 billion.
Mobileye, an Intel subsidiary that specializes in self-driving cars, recorded a 1% decrease in sales compared to the previous year, generating $454 million.
Intel’s gross margin, adjusted to nearly 40%, beats the company’s previous forecast of 37.5%. Despite heavy investments in manufacturing capability, investors desire further expansion of Intel’s gross margins.
The company’s foundry business, Intel Foundry Services, which manufactures chips for other companies, achieved $232 million in revenue.
In the first quarter, Intel faced its largest loss ever due to slumping PC and server markets, resulting in decreased demand for its central processors. However, the company’s second-quarter results exceeded the forecast provided at the time.
Intel’s management acknowledges that the firm’s turnaround will require time. The company aims to match TSMC’s chip manufacturing capabilities by 2026, enabling it to bid for the production of advanced mobile processors for other companies. This strategy, known as “five nodes in four years,” is a part of Intel’s long-term plans for growth.
Intel remains confident in its ability to achieve these technological goals.
This story is developing. Please check back for updates.
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