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Intel (INTC) Q2 2022 Results

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Intel CEO Pat Gelsinger pictured during the “Chips for health” event at Hotel Grischa during the World Economic Forum in Davos, Switzerland, May 24, 2022.

Eric Lalmand | Belgian Mag | AFP | Getty Images

Intel shares fell as much as 10% in extended trading on Thursday after the chipmaker reported second-quarter results and quarterly and full-year guidance fell short of analysts’ expectations.

Here’s how the company did it:

  • Earnings: 29 cents per share, adjusted, versus 70 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $15.32 billion, versus $17.92 billion as forecast by analysts, according to Refinitiv.

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

“Results this quarter fell short of the standards we have set for the company and our shareholders,” CEO Pat Gelsinger said in the statement. “We need to do better and we will do better. The sudden and rapid decline in economic activity has been the main driver, but the shortfall also reflects our own execution issues.”

As for guidance, Intel called for 35 cents of adjusted earnings per share on $15 billion to $16 billion in revenue. Analysts polled by Refinitiv had expected 86 cents in adjusted earnings per share on $18.62 billion in revenue.

Intel has lowered its expectations for the full year. He said he now expects adjusted annual earnings of $2.30 per share and revenue of $65 billion to $68 billion. The forecast three months ago was for $3.60 in adjusted earnings per share on $76.0 billion in revenue. Analysts polled by Refinitiv were looking for earnings of $3.42 per share and revenue of $74.34 billion.

Small and medium-sized businesses have slowed their purchases of computers, but the company has resisted, David Zinsner, Intel’s chief financial officer, told CNBC in an interview. Still, the updated forecast takes into account economic weakness that could cause organizations to delay PC refresh cycles.

“We think we’re at rock 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 significantly below the consensus estimate of $8.89 billion. dollars among analysts polled by StreetAccount. Earlier this month, technology industry researcher Gartner said PC shipments were down nearly 13% in the quarter. In a presentation To investors, Intel flagged a “slowdown” in PC demand in the consumer and education markets and said higher unit costs were reducing the segment’s operating profit.

Intel’s recently created data center and AI segment, including server chips, accelerators, memory and field-programmable gate arrays, generated $4.6 billion in revenue, in down 16%, lagging the StreetAccount consensus of $6.19 billion. Competitive pressure hurt the unit’s revenue, Intel said.

Intel’s new Network and Edge segment, home to the company’s networking products, generated $2.3 billion in revenue, up 11% and just above the StreetAccount consensus of 2. $27 billion.

During the quarter, Intel spear Habani Gaudi2 AI training chips that compete with Nvidia’s A100 graphics cards. And Intel has called on Congress to move forward with federal legislation to support semiconductor manufacturing in the United States, so it can proceed with a factory in Ohio. Earlier Tuesday, the United States House of Representatives passed the Chips and Science Act, sending the bill to President Joe Biden.

Excluding the after-hours move, Intel shares have fallen 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 on a conference call beginning at 5 p.m. 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.

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