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Intel (INTC) Beats Q4 Earnings Estimates on Higher Revenues
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Intel Corporation (INTC - Free Report) reported better-than-expected fourth-quarter 2023 results, largely due to strong operating leverage, expense discipline and significant traction from its IDM 2.0 (integrated device manufacturing) strategy.
Net Income
The company reported GAAP earnings of $2,669 million or 63 cents per share against a loss of $664 million or a loss of 16 cents per share in the year-ago quarter. The significant improvement was primarily attributable to higher revenues and lower operating expenses.
Non-GAAP earnings in the reported quarter were $2,303 million or 54 cents per share compared with $635 million or 15 cents per share a year ago. The bottom line beat the Zacks Consensus Estimate by 10 cents.
Intel Corporation Price, Consensus and EPS Surprise
For 2023, Intel recorded GAAP earnings of $1,689 million or 40 cents per share compared with $8,014 million or $1.94 per share in 2022. Non-GAAP earnings declined to $4,423 million or $1.05 per share from $6,891 million or $1.67 per share in 2022.
Revenues
GAAP revenues in the reported quarter were $15,406 million, up from $14,042 million a year ago. The quarterly revenues were well above the high end of the guided range, with better-than-expected performance across all lines of business. The top line beat the consensus estimate of $15,140 million.
For 2023, GAAP revenues were $54,228 million, down from $63,054 million in 2022.
Segment Performance
By segments, Client Computing Group (CCG, 57.4% of total revenues) revenues increased 33.1% year over year to $8,844 million. This was primarily due to strength in gaming and commercial segments with record notebook shipments. The segment revenues exceeded management expectations and were well above our estimates of $7,923 million. PC consumption in 2023 was approximately 270 million units, with customer inventory levels getting normalized.
Datacenter and AI Group (DCAI, 25.9%) revenues fell 9.9% year over year to $3,985 million owing to competitive pressures, CPU TAM (total addressable market) contraction and inventory correction. It also missed our estimates of $4,517 million. The company launched 5th Gen Intel Xeon processor in the quarter, which is optimized for AI workloads with up to 42% higher AI inference performance compared to its predecessor.
Network and Edge Group (NEX, 9.5%) revenues declined 23.6% to $1,471 million as elevated inventory levels and soft demand trends with sluggish recovery in China affected segment sales. The segment revenues fell short of our estimates of $1,688 million.
Mobileye (4.1%) revenues improved 12.7% to $637 million, primarily driven by higher demand for EyeQ products. Intel Foundry Services (IFS, 1.9%) revenues were $291 million, up 63.5% on increased traditional packaging revenues, while All Other (1.1%) revenues were $178 million, falling 42% year over year.
Other Operating Details
Non-GAAP gross margin improved to 48.8% from 43.8% a year ago, while non-GAAP operating margin improved from 4.3% to 16.7%.
CCG's operating income was up a stellar 451.1% year over year to $2,888 million on improved TAM, lower inventory reserves and cost discipline, while DCAI's operating income was $78 million, down from $126 million a year ago, primarily due to higher node development costs. NEX's operating loss was $12 million against an operating profit of $126 million on lower revenues, while that from Mobileye was up 15.2% to $242 million on higher revenues.
Cash Flow & Liquidity
As of Dec 31, 2023, Intel had cash and cash equivalents of $7,079 million, with $46,978 million of long-term debt compared with respective tallies of $11,144 million and $37,684 million in the prior-year period. In 2023, Intel generated $11,471 million of cash from operating activities compared with $15,433 million in 2022.
Outlook
For the first quarter of 2024, Intel offered muted guidance. It expects non-GAAP revenues to be $12.2-$13.2 billion due to material inventory corrections in Mobileye and a significant drop in IFS revenues. Non-GAAP gross margin is likely to be 44.5%. Non-GAAP earnings are expected to be around 13 cents per share.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.
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Intel (INTC) Beats Q4 Earnings Estimates on Higher Revenues
Intel Corporation (INTC - Free Report) reported better-than-expected fourth-quarter 2023 results, largely due to strong operating leverage, expense discipline and significant traction from its IDM 2.0 (integrated device manufacturing) strategy.
Net Income
The company reported GAAP earnings of $2,669 million or 63 cents per share against a loss of $664 million or a loss of 16 cents per share in the year-ago quarter. The significant improvement was primarily attributable to higher revenues and lower operating expenses.
Non-GAAP earnings in the reported quarter were $2,303 million or 54 cents per share compared with $635 million or 15 cents per share a year ago. The bottom line beat the Zacks Consensus Estimate by 10 cents.
Intel Corporation Price, Consensus and EPS Surprise
Intel Corporation price-consensus-eps-surprise-chart | Intel Corporation Quote
For 2023, Intel recorded GAAP earnings of $1,689 million or 40 cents per share compared with $8,014 million or $1.94 per share in 2022. Non-GAAP earnings declined to $4,423 million or $1.05 per share from $6,891 million or $1.67 per share in 2022.
Revenues
GAAP revenues in the reported quarter were $15,406 million, up from $14,042 million a year ago. The quarterly revenues were well above the high end of the guided range, with better-than-expected performance across all lines of business. The top line beat the consensus estimate of $15,140 million.
For 2023, GAAP revenues were $54,228 million, down from $63,054 million in 2022.
Segment Performance
By segments, Client Computing Group (CCG, 57.4% of total revenues) revenues increased 33.1% year over year to $8,844 million. This was primarily due to strength in gaming and commercial segments with record notebook shipments. The segment revenues exceeded management expectations and were well above our estimates of $7,923 million. PC consumption in 2023 was approximately 270 million units, with customer inventory levels getting normalized.
Datacenter and AI Group (DCAI, 25.9%) revenues fell 9.9% year over year to $3,985 million owing to competitive pressures, CPU TAM (total addressable market) contraction and inventory correction. It also missed our estimates of $4,517 million. The company launched 5th Gen Intel Xeon processor in the quarter, which is optimized for AI workloads with up to 42% higher AI inference performance compared to its predecessor.
Network and Edge Group (NEX, 9.5%) revenues declined 23.6% to $1,471 million as elevated inventory levels and soft demand trends with sluggish recovery in China affected segment sales. The segment revenues fell short of our estimates of $1,688 million.
Mobileye (4.1%) revenues improved 12.7% to $637 million, primarily driven by higher demand for EyeQ products. Intel Foundry Services (IFS, 1.9%) revenues were $291 million, up 63.5% on increased traditional packaging revenues, while All Other (1.1%) revenues were $178 million, falling 42% year over year.
Other Operating Details
Non-GAAP gross margin improved to 48.8% from 43.8% a year ago, while non-GAAP operating margin improved from 4.3% to 16.7%.
CCG's operating income was up a stellar 451.1% year over year to $2,888 million on improved TAM, lower inventory reserves and cost discipline, while DCAI's operating income was $78 million, down from $126 million a year ago, primarily due to higher node development costs. NEX's operating loss was $12 million against an operating profit of $126 million on lower revenues, while that from Mobileye was up 15.2% to $242 million on higher revenues.
Cash Flow & Liquidity
As of Dec 31, 2023, Intel had cash and cash equivalents of $7,079 million, with $46,978 million of long-term debt compared with respective tallies of $11,144 million and $37,684 million in the prior-year period. In 2023, Intel generated $11,471 million of cash from operating activities compared with $15,433 million in 2022.
Outlook
For the first quarter of 2024, Intel offered muted guidance. It expects non-GAAP revenues to be $12.2-$13.2 billion due to material inventory corrections in Mobileye and a significant drop in IFS revenues. Non-GAAP gross margin is likely to be 44.5%. Non-GAAP earnings are expected to be around 13 cents per share.
Zacks Rank & Stocks to Consider
Intel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.