Intel quarterly results disappoint investors
Anticipates further losses next quarter
Intel's fourth-quarter earnings fell short of analysts' expectations when it shared them on Thursday.
The company said its revenue fell 32% year-over-year (YoY) to $14 billion in the fiscal quarter that ended 31st December.
The chipmaker reported a net loss of $664 million, compared to a profit of $4.62 billion in the same quarter last year.
Revenue for the whole year was $63.1 billion, a 20% decline YoY.
"Clearly the financials aren't what we hoped for, but we're also pleased with the execution process we made," CEO Pat Gelsinger said during Thursday's earnings call.
"Despite the economic and market headwinds, we continued to make good progress on our strategic transformation in Q4, including advancing our product roadmap and improving our operational structure and processes to drive efficiencies while delivering at the low-end of our guided range."
Gelsinger added that the company would continue to overcome short-term issues while pursuing long-term goals in 2023.
The company reported double-digit revenue declines in its two main business segments in the fourth quarter.
As the PC market continued to contract, the company's Client Computing Group (CCG), which comprises its desktop and laptop CPUs, saw the worst drop, falling 36% to $6.6 billion.
Demand fell mostly in the consumer and education markets and customers reduced their inventories, the chipmaker said.
According to Gartner, the PC market shrank more sharply than in any previous quarter since it started monitoring the sector in the 1990s.
The $4.3 billion in sales in Intel's Data Center and AI sector (DCAI), which includes server chips, memory, and field-programmable gate arrays, was down 33% due to increased competition and a shrinking market.
Intel's network and edge (NEX) business area, which includes networking solutions, also showed signs of weakening demand. Revenue for the division fell 1% YoY to $2.1 billion, marking a dramatic reversal from the double-digit growth the division had previously posted. Despite this, the division grew 11% during the fiscal year 2022.
Intel's smaller groups, like Mobileye and Intel Foundry Services (IFS), grew 59% and 30%, respectively, during the fourth quarter.
Intel did not offer a forecast beyond the first quarter of 2023, although Gelsinger assured investors that the firm will start to rebound in the second half of the year.
According to IDC, Intel continues to dominate the markets for PC and server processor chips, with a market share of more than 70%. However, this is down from over 90% in those areas in 2017.
Intel's main rival is AMD, which has been stealing business from Intel under the leadership of CEO Lisa Su. Intel is also facing competition from graphics chipmaker Nvidia, which is now expanding into central processors.
Intel's former customers, such as Apple and Amazon, are also focusing on creating their own chips.
Gelsinger predicted that 2023 will be a year of stabilisation followed by re-acceleration.
David Zinsner, Intel CFO, noted: "In the fourth quarter, we took steps to right-size the organization and rationalize our investments, prioritizing the areas where we can deliver the highest value for the long term."
"These actions underpin our cost-reduction targets of $3 billion in 2023, and set the stage to achieve $8 billion to $10 billion by the end of 2025."