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Intel (INTC) Beats on Q3 Earnings Despite Lower Revenues
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Intel Corporation (INTC - Free Report) reported mixed third-quarter 2022 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed. Both revenues and earnings declined year over year owing to a challenging macroeconomic environment and softening demand trends.
Quarter Details
The company reported a GAAP net income of $1,019 million or 25 cents per share in the third quarter compared with $6,823 million or $1.67 per share in the year-ago quarter. The significant decline was due to a sudden and rapid fall in economic activity and a slowdown in demand that resulted in top-line contraction. Non-GAAP earnings in the reported quarter were $2,432 million or 59 cents per share compared with $5,908 million or $1.45 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 25 cents.
GAAP revenues were $15,338 million, down 20.1% year over year, owing to softness in the end consumer and educational market demand. In response to supply chain issues, the company is closely collaborating with customers and suppliers to effectively address their most critical needs. The top line missed the consensus estimate of $15,491 million.
Intel Corporation Price, Consensus and EPS Surprise
Intel has reorganized its business segments to better reflect the growth in both large traditional markets and high-growth emerging markets for increased transparency, focus and accountability.
Client Computing Group (CCG, 52.5% of total operating segment revenues) revenues were down 17% year over year to $8,124 million. This was largely due to global TAM weakness, particularly in consumer, education and small/medium business markets.
Datacenter and AI Group (DCAI, 27.2%) revenues fell 27.1% year over year to $4,209 million. This was due to OEM inventory reductions and competitive pressures. The company has a singular focus on regaining performance and TCO leadership across all workloads and use cases from enterprise to cloud.
Network and Edge Group (NEX, 14.6%) revenues improved 14.1% to $2,333 million. This was due to the strength and data center networking products, specifically networking Ethernet and 5G.
Revenues from Accelerated Computing Systems and Graphics Group (AXG, 1.2%) were up 8.2% to $185 million. This was due to the ramp-up of Blockscale products. Mobileye (2.9%) revenues were up 38% to $450 million, primarily driven by higher demand for EyeQ products. Intel Foundry Services (IFS, 1.1%) revenues were $171 million, down 1.7%.
Other Operating Details
Non-GAAP gross margin was 45.9%, down 1240 basis points (bps) on a year-over-year basis. Non-GAAP operating margin contracted 2,100 bps to 10.8%.
CCG's operating income was down 53.9% year over year to $1,655 million and DCAI's operating income fell 99.2% to $ 17 million. NEX's operating income fell to $75 million from $511 million, while Mobileye’s operating income improved to $142 million from $127 million a year ago.
Cash Flow & Liquidity
As of Sep 30, 2022, Intel had cash and cash equivalents of $4,529 million, with $37,240 million of long-term debt. The company generated $7,730 million of cash from operations in the first nine months of 2022 compared with $24,053 million in the prior-year period.
Outlook
For the fourth quarter of 2022, Intel expects non-GAAP revenues to be $14-$15 billion. Non-GAAP gross margin is likely to be 45%. Non-GAAP earnings are expected to be around 20 cents per share.
For 2022, the company expects non-GAAP revenues to be $63-$64 billion, down from prior expectations of $65-$68 billion owing to challenging macroeconomic conditions with a high degree of uncertainty. Non-GAAP gross margin is likely to be 47.5%. Non-GAAP earnings are expected to be $1.95 per share, down from prior expectations of $2.30.
TESSCO Technologies Incorporated , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 81.7%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 34.4% since October 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Ooma Inc. (OOMA - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 28.6%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 27% since April 2021.
Ooma offers communications services and related technologies for businesses and consumers in the United States and Canada. It helps to create powerful connected experiences for businesses and consumers through its smart cloud-based SaaS platform.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 37.1% since March 2021.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.
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Intel (INTC) Beats on Q3 Earnings Despite Lower Revenues
Intel Corporation (INTC - Free Report) reported mixed third-quarter 2022 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed. Both revenues and earnings declined year over year owing to a challenging macroeconomic environment and softening demand trends.
Quarter Details
The company reported a GAAP net income of $1,019 million or 25 cents per share in the third quarter compared with $6,823 million or $1.67 per share in the year-ago quarter. The significant decline was due to a sudden and rapid fall in economic activity and a slowdown in demand that resulted in top-line contraction. Non-GAAP earnings in the reported quarter were $2,432 million or 59 cents per share compared with $5,908 million or $1.45 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 25 cents.
GAAP revenues were $15,338 million, down 20.1% year over year, owing to softness in the end consumer and educational market demand. In response to supply chain issues, the company is closely collaborating with customers and suppliers to effectively address their most critical needs. The top line missed the consensus estimate of $15,491 million.
Intel Corporation Price, Consensus and EPS Surprise
Intel Corporation price-consensus-eps-surprise-chart | Intel Corporation Quote
Segment Performance
Intel has reorganized its business segments to better reflect the growth in both large traditional markets and high-growth emerging markets for increased transparency, focus and accountability.
Client Computing Group (CCG, 52.5% of total operating segment revenues) revenues were down 17% year over year to $8,124 million. This was largely due to global TAM weakness, particularly in consumer, education and small/medium business markets.
Datacenter and AI Group (DCAI, 27.2%) revenues fell 27.1% year over year to $4,209 million. This was due to OEM inventory reductions and competitive pressures. The company has a singular focus on regaining performance and TCO leadership across all workloads and use cases from enterprise to cloud.
Network and Edge Group (NEX, 14.6%) revenues improved 14.1% to $2,333 million. This was due to the strength and data center networking products, specifically networking Ethernet and 5G.
Revenues from Accelerated Computing Systems and Graphics Group (AXG, 1.2%) were up 8.2% to $185 million. This was due to the ramp-up of Blockscale products. Mobileye (2.9%) revenues were up 38% to $450 million, primarily driven by higher demand for EyeQ products. Intel Foundry Services (IFS, 1.1%) revenues were $171 million, down 1.7%.
Other Operating Details
Non-GAAP gross margin was 45.9%, down 1240 basis points (bps) on a year-over-year basis. Non-GAAP operating margin contracted 2,100 bps to 10.8%.
CCG's operating income was down 53.9% year over year to $1,655 million and DCAI's operating income fell 99.2% to $ 17 million. NEX's operating income fell to $75 million from $511 million, while Mobileye’s operating income improved to $142 million from $127 million a year ago.
Cash Flow & Liquidity
As of Sep 30, 2022, Intel had cash and cash equivalents of $4,529 million, with $37,240 million of long-term debt. The company generated $7,730 million of cash from operations in the first nine months of 2022 compared with $24,053 million in the prior-year period.
Outlook
For the fourth quarter of 2022, Intel expects non-GAAP revenues to be $14-$15 billion. Non-GAAP gross margin is likely to be 45%. Non-GAAP earnings are expected to be around 20 cents per share.
For 2022, the company expects non-GAAP revenues to be $63-$64 billion, down from prior expectations of $65-$68 billion owing to challenging macroeconomic conditions with a high degree of uncertainty. Non-GAAP gross margin is likely to be 47.5%. Non-GAAP earnings are expected to be $1.95 per share, down from prior expectations of $2.30.
Zacks Rank & Stocks to Consider
Intel currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TESSCO Technologies Incorporated , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 81.7%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 34.4% since October 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Ooma Inc. (OOMA - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 28.6%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 27% since April 2021.
Ooma offers communications services and related technologies for businesses and consumers in the United States and Canada. It helps to create powerful connected experiences for businesses and consumers through its smart cloud-based SaaS platform.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 37.1% since March 2021.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.