Components & Peripherals News
Intel’s Earnings ‘Collapse’ And Its Comeback Plan: 7 Things To Know
Dylan Martin
The semiconductor giant’s latest earnings report has investors concerned that Intel has a steeper hill to climb to return to growth and higher profitability as part of CEO Pat Gelsinger’s comeback plan. CRN rounds up seven important things to know about Intel’s fourth-quarter 2022 earnings report and how it plans to recover.
Intel Thinks Things Will Get Worse Before They Get Better In 2023
While Intel’s fourth-quarter earnings were worse than expected, the chipmaker believes financial conditions will deteriorate even further in the first half of the year before things potentially get better in the second half, though executives remain uncertain.
The semiconductor giant projected that first-quarter revenue will be roughly $10.5 billion to $11.5 billion. That would amount to a nearly 43 percent decline from the same period last year on the low end and a 37.5 percent year-over-year decline on the high end.
The company also expects gross margin to degrade further in the first quarter, droping down to 39 percent with non-GAAP measures and 34.1 percent on a GAAP basis. This leads the company further off the mark from its expectation last year that it would maintain a gross margin of 51 percent to 53 percent this year and next, which was already lower than what many investors would have liked.
Intel estimates its earnings per share will take a greater plunge in the first quarter too, expecting a loss of 15 cents per share with non-GAAP measures and a loss of 80 cents per share with GAAP. That would mark a 117 percent decline in earnings per share from the same period last share with non-GAAP measures and a 140 percent decline with GAAP.
David Zinsner, Intel’s CFO, also indicated there is some uncertainty as to whether the company will become cash-flow neutral this year after going into negative territory in 2022. He said Intel will likely have a negative cash flow in the first half of the year and expects the company’s cash flow to “approach” the breakeven point in the second half.
Though Intel expects earnings to improve in the latter six months of 2023, the company is so uncertain about how things could play out that it declined to issue guidance for the full year. This is a divergence from Intel’s tradition of issuing full-year guidance in the first-quarter earnings.
“We expect macro weakness to persist at least through the first half of the year, with the possibility of second-half improvements. However, given the uncertainty in the current environment, we are not going to provide revenue guidance beyond Q1,” Gelsinger said on the earnings call.
