Intel stock drops after earnings miss, execs predict quarterly loss as data-center market shrinks

Intel Corp. shares dropped more than 9% in the extended session Thursday after the chip maker reported a big miss for the fourth quarter and forecast a loss for the first quarter.

executives forecast an adjusted loss of 15 cents a share on revenue of about $10.5 billion to $11.5 billion and adjusted gross margins of about 39% for the current quarter. Analysts surveyed by FactSet had estimated adjusted first-quarter earnings of 25 cents a share on revenue of $13.93 billion.

Chief Executive Pat Gelsinger told analysts on the conference call he would not provide a 2023 forecast. Gelsinger restricted the outlook to the current quarter, because of macro uncertainties, a digestion of PC inventory that was “difficult” to forecast, and pointed to a weakened data-center market. In the fourth quarter, AI group sales dropped 33% to $4.3 billion, while the Street expected revenue of $4.08 billion.

“We expect Q1 server consumption [total addressable market] to decline both sequentially and year-over-year at an accelerated rate, with first-half 2023 server consumption TAM down year-on-year before returning to growth in the second-half,” Gelsinger said.

Intel reported a fourth-quarter loss of $664 million, or 16 cents a share, versus net income of $4.62 billion, or $1.13 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 10 cents a share, compared with $1.13 a share from a year ago.

Revenue declined to $14.04 billion from $20.52 billion in the year-ago quarter, for a 10th straight quarter of year-over-year declines. Gross margins dropped to 43.8% from 55.8% a year ago, and 45.9% in the third quarter.

Analysts surveyed by FactSet estimated earnings of 21 cents a share on revenue of $14.49 billion, based on Intel’s forecast of 20 cents a share on about $14 billion to $15 billion.

Intel shares fell 9% in after-hours trading, after closing the regular session up 1.3% at $30.09. Other chip stocks also declined, including top rival Advanced Micro Devices Inc.
which saw shares drop more than 3% in after-hours trading, and Nvidia Corp.
which declined 2%.

Breaking down divisions: Client-computing sales fell 36% to $6.6 billion from a year ago; “network and edge” sales slipped 1% to $2.1 billion; and foundry services revenue rose 30% to $319 million.

Analysts surveyed by FactSet expected revenue from client computing to come in at $7.36 billion; “network and edge” revenue of $2.23 billion; and foundry services revenue of $199.1 million.

Over the past 12 months, Intel stock has fallen 43%. Over the same period, the Dow Jones Industrial Average 
 — which counts Intel as a component — has slipped 1%, the PHLX Semiconductor Index 
 has dropped 13%, the S&P 500 index 
 has declined 7%, and the tech-heavy Nasdaq Composite Index 
 has dropped 15%.