Intel Exceeds Earnings Expectations but Falls Short in Sales
Intel, the multinational technology company, announced its first-quarter earnings on Thursday. While the company exceeded Wall Street expectations in terms of earnings per share, it fell short in sales. As a result, the stock declined by over 8% during extended trading.
For the quarter ending in March, Intel performed in line with the consensus expectations of the London Stock Exchange Group (LSEG). On a midpoint basis, Intel expects to earn 10 cents per share on revenues of $13 billion for the second quarter. However, analysts’ estimates project earnings of 25 cents per share on $13.57 billion in sales. This forecast indicates a weaker quarter for Intel.
This year, Intel reported a net loss of $400 million, or 9 cents per share, compared to $2.8 billion, or 66 cents per share, last year. Despite the loss, Intel generated $12.7 billion in revenue, marking a 9% increase from the previous year’s $11.7 billion.
An interesting development in Intel’s financial reports is the separation of its chip manufacturing business, Foundry, into its own line item. The Foundry business reported $4.4 billion in revenue for the quarter, a 10% decrease from the previous year. Additionally, it reported an operating loss of $2.5 billion. Earlier this month, Intel revealed that its foundry suffered an operating loss of $7 billion in 2023.
Intel’s main business remains the manufacture of chips for PCs and laptops, as indicated by client computing sales. Last year, the company sold a total of $7.5 billion in chips, representing a 31% increase from the previous year. Furthermore, Intel manufactures central processors for servers and other parts and software included in its Data Center and AI business unit. Sales from this product line rose by 5% to $3 billion, despite facing competition from Nvidia’s AI chips.
In an effort to compete with Nvidia, Intel recently announced a new AI processor for servers called Gaudi 3. However, the processor will not be available until later this year. Despite this, Intel expects its Gaudi 3 chips to generate more than $500 million in sales in the second half of the year.
Intel’s executives will hold an earnings conference call at 5 p.m. Eastern Time to discuss the results and provide further insights into the company’s performance.
In conclusion, while Intel exceeded earnings expectations, its weaker sales indicate a challenging quarter. The separation of its chip manufacturing business and the introduction of new products like Gaudi 3 demonstrate Intel’s efforts to adapt to a competitive market. The upcoming earnings conference call will provide a platform for Intel’s executives to address concerns and outline strategies for future growth.
