Company History Marked By Largest Quarterly Loss, says Intel Report

Intel reported a 133% annual reduction in earnings per share in Q1 2023 with revenue dropping nearly 36% YoY to $11.7bn. It is the fifth consecutive quarter of falling sales for the semiconductor giant and the second consecutive quarter of losses. Intel’s CEO, Patrick Gelsinger, aims to compete with TSMC by manufacturing chips as advanced as the ones made in Taiwan by 2026. The company’s Client Computing group, which includes chips that power most Windows PCs, reported a 38% decline in revenue to $5.8bn.

Intel, the semiconductor giant that put “silicon” in “Silicon Valley,” reported its first-quarter results on Wednesday, showing a staggering 133% annual reduction in earnings per share. Revenue dropped nearly 36% year over year to $11.7 billion. However, the loss per share and sales were slightly better than soft Wall Street expectations. The stock fluctuated in extended trading after initially rising on the report.

Intel Versus Refinitiv Consensus Expectations

Intel’s first-quarter results were better than the Refinitiv consensus expectations:

  • Loss per share: 4 cents per share, adjusted, versus 15 cents per share expected
  • Revenue: $11.7 billion, adjusted, versus $11.04 billion expected

For the second quarter, Intel expects to lose 4 cents per share on revenue of $12 billion. That forecast is shy of analyst expectations for earnings of 1 cent per share on $11.75 billion in sales, according to Refinitiv.

Intel Swings to a Net Loss of $2.8 Billion

In the first quarter, Intel swung to a net loss of $2.8 billion, or 66 cents per share, from a net profit of $8.1 billion, or $1.98 per share, last year. Excluding the impact of inventory restructuring, a recent change to employee stock options, and other acquisition-related charges, Intel said it lost 4 cents a share, which was a narrower loss than analysts had expected. Revenue decreased to $11.7 billion from $18.4 billion a year ago.

Fifth Consecutive Quarter of Falling Sales for Intel

It’s the fifth consecutive quarter of falling sales for the semiconductor giant and the second consecutive quarter of losses. It’s also Intel’s largest quarterly loss of all time, beating out the fourth quarter of 2017, when it lost $687 million.

Intel CEO Patrick Gelsinger’s Turnaround Plan

Investors are unsure if Intel has bottomed out as CEO Patrick Gelsinger begins his third year in the position. The stock has gained more than 9% so far in 2023, but it has lost more than 35% since this time last year.

Open up Intel’s plants as foundries, or factories that can create chips for other companies, was part of Gelsinger’s turnaround strategy when he took over. By 2026, Intel wants to be able to produce processors as sophisticated as those produced by TSMC in Taiwan and compete with them for specialized work like Apple’s A-series CPUs in iPhones. On Thursday, Intel stated that it was still on schedule to achieve that objective.

“We still have more work to do as we reestablish process, product, and cost leadership, but we continue to provide proof points each quarter,” Gelsinger said on an earnings call.

Struggling Business for Intel, Especially in PC Chips

A corporation that used to print money is currently having trouble, particularly with PC chips, which used to be the company’s strongest product category. According to a forecast from market watcher IDC, global PC shipments fell by close to 30% in the first quarter due to the industry’s general downturn.

Intel’s Client Computing group, which includes the chips that power the majority of desktop and laptop Windows PCs, reported $5.8 billion in revenue, down 38% on an annual basis.

“We are seeing increasing stability in the PC market with inventory corrections largely proceeding as we had expected,” Gelsinger said on the call, signaling the PC market may be reaching a bottom.

Intel’s server chip division, under its Data Center and AI segment, suffered an even worse decline, falling 39% to $3.

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