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Intel (INTC) Misses Q4 Earnings Estimates on Lower Revenues

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Intel Corporation (INTC - Free Report) reported soft fourth-quarter 2022 results, missing the bottom line and the top line estimates. Both revenues and earnings declined year over year owing to a challenging macroeconomic environment, uncertain business conditions and softening demand trends.

Quarter Details

The company reported a GAAP net loss of $664 million or a loss of 16 cents per share against a net income of $4,623 million or $1.13 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 $394 million or 10 cents per share compared with $4,723 million or $1.15 per share a year ago. The bottom line missed the Zacks Consensus Estimate by 10 cents.

Intel Corporation Price, Consensus and EPS Surprise

Intel Corporation Price, Consensus and EPS Surprise

Intel Corporation price-consensus-eps-surprise-chart | Intel Corporation Quote

In 2022, GAAP net income declined to $8,014 million or $1.94 per share from $19,868 million or $4.86 per share in 2021. Non-GAAP earnings in 2022 were $7,594 million or $1.84 per share compared with $21,691 million or $5.30 per share in 2021.

GAAP revenues in the reported quarter were $14,042 million, down 31.6% 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 $14,462 million.

Segment Performance

By segment, Client Computing Group (CCG, 46.8% of total operating segment revenues) revenues were down 35.7% year over year to $6,625 million. This was largely due to global TAM weakness, particularly in consumer, education and small/medium business markets, along with PC demand softening and inventory reduction by customers.

Datacenter and AI Group (DCAI, 30.4%) revenues fell 33% year over year to $4,304 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 declined 1.2% to $2,061 million as growth in Xeon network CPUs and infrastructure processing units was offset by lower Edge business owing to a challenging macroeconomic environment.

Revenues from Accelerated Computing Systems and Graphics Group (AXG, 1.7%) were relatively flat at $247 million as a ramp-up from the launch of Sapphire Rapids HBM was offset by a decline in the integrated client base. Mobileye (4%) revenues were up 58.7% to $565 million, primarily driven by higher demand for EyeQ products. Intel Foundry Services (IFS, 2.3%) revenues were $319 million, up 30.2%, buoyed by higher automotive shipments.

Other Operating Details

Non-GAAP gross margin was 43.8%, down 1,200 basis points (bps) on a year-over-year basis. Non-GAAP operating margin contracted 2,390 bps to 4.3%.

CCG's operating income was down 81.6% year over year to $699 million and DCAI's operating income fell 84.2% to $371 million, primarily due to significant revenue contraction. NEX's operating income plummeted to $58 million from $352 million, while that from Mobileye improved to $210 million from $123 million a year ago.

Cash Flow & Liquidity

As of Dec 31, 2022, Intel had cash and cash equivalents of $11,144 million, with $37,684 million of long-term debt compared with respective tallies of $4,827 million and $33,510 million in the prior-year period. In 2022, Intel generated $15,433 million of cash from operations compared with $29,456 million in 2021.


For the first quarter of 2023, Intel expects non-GAAP revenues to be $10.5-$11.5 billion. Non-GAAP gross margin is likely to be 39%. Non-GAAP loss is expected to be around 15 cents per share.

The company has refrained from offering guidance for 2023 owing to intense market volatility, depleting customer inventory levels and continued business uncertainties. Intel expects the macroeconomic headwinds to ease gradually in the second half of the year.

Zacks Rank & Stocks to Consider

Intel currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Here are some better-ranked stocks from the broader industry.

Ooma Inc. (OOMA - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 21.7%, on average, in the trailing four quarters. Earnings estimates for Ooma for the current year have moved up 43.2% since March 2022.

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.

Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from the strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 12.7%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

TESSCO Technologies Incorporated (TESS - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 126.1%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 44.3% since January 2022.

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.

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