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intel Shares fell in extended trading Thursday after the chip maker issued an outlook for the first quarter of 2024 that lagged analyst forecasts, while its latest quarter results beat Wall Street estimates.
Here’s how Intel performed against LSEG (formerly Refinitiv) consensus expectations for the quarter ending in December:
- earnings per share: 54 cents adjusted, vs. 45 cents expected
- Income: $15.4 billion vs. $15.15 billion expected
For the first quarter of fiscal 2024, Intel expects earnings of 13 cents per share on revenue of $12.2 billion to $13.2 billion, while LSEG expects earnings of 33 cents per share on revenue of $14.15 billion.
Intel CEO Pat Gelsinger said on a call with analysts that the company’s core businesses — PC and server chips — will be at the low end of the company’s seasonal range in the current quarter, but the weakness will hurt Intel’s overall sales. Revenue decreases at subsidiaries including Mobileye and its programmable chip unit, as well as other businesses closed or sold by the company.
“We view the core business as healthy,” Gelsinger said. “We don’t see any areas of market share loss and the products are going strong.”
Intel reported net income of $2.7 billion, or 63 cents a share, compared with a net loss of $0.7 billion, or 16 cents a share, last year.
Intel reported fourth-quarter sales growth of 10% from $14.04 billion a year earlier, breaking the company’s streak of seven quarters with declining revenue. Intel’s gross margin was 40%, down 2.6 percentage points year over year.
Intel shares have risen more than 74% in the past year. According to market research firm Gartner, the company is the largest semiconductor maker by revenue, even though its market cap puts it at the bottom. NVIDIA And amd On Wall Street.
Cloud providers and big tech companies, big spenders, are focusing on the AI boom, which explains Nvidia’s recent outperformance. In the past, the most important part in a server was the central processor made by Intel. Now, an AI server can have up to eight Nvidia or AMD graphics processing units (GPUs) coupled to one or two Intel CPUs.
“The data center has seen some wallet share change between CPUs and accelerators over the last several quarters,” Intel CFO David Zinsner said on a call with analysts Thursday.
Intel also continues to focus on the five-year plan implemented by Gelsinger, who took over the chipmaker in 2021. Taiwan Semiconductor Manufacturing Company In the ability to provide manufacturing services to other companies, as well as improve their own branded chips.
“Tremendous progress was made on Intel’s transformation this quarter,” Gelsinger said in a statement. Intel said Thursday it will restate previous results under a new system where Intel must account for costs related to the internal manufacturing of its own chips.
Intel Foundry Services, its business that makes chips for other companies, remains nascent, with revenues of $291 million, up 63% year-over-year.
Intel is cutting costs by cutting the workforce and selling off smaller parts of its business. Last year, the company said it would shut down its programmable chip unit after becoming a self-driving car subsidiary mobileeye into an independent company in 2022. Zinsner said Intel cut $3 billion in costs last year and the company spun off or divested five different business lines last year.
Intel’s largest division is its client computing group, which includes laptop and PC processor chips. The overall PC industry has been in recession for two years, but has recently begun to show signs of growth again. Intel’s sales increased 33% to $8.8 billion in the fourth quarter.
Gelsinger said Intel has “normalized” demand for PC chips and sales are strong in the gaming and commercial segments. He said Intel expects the total PC market to expand this year.
Sales of Intel’s second-largest division, data center and AI, fell 10% to $4 billion. That unit includes the server CPU and GPU. Intel’s Network and Edge division, which sells parts for carriers and networking, reported sales of $1.5 billion, down 24% from last year.
Zinsner said Intel expects its data center business to decline by a “double-digit” percentage sequentially in the fourth quarter compared to the first quarter.
Intel said it paid a $3.1 billion dividend in 2023.
