Intel Reports Unprecedented Quarterly Loss as Sales and Revenue Plummet

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Intel Reports Unprecedented Quarterly Loss as Sales and Revenue Plummet

Intel reported a staggering 133% annual reduction in earnings per share for the first quarter, with revenue dropping almost 36% YoY to $11.7 billion. Despite swinging to a net loss of $2.8 billion, the results still managed to exceed Wall Street expectations. The company is now facing its largest quarterly loss ever, with falling sales for the fifth consecutive quarter.

For the second quarter, Intel expects to lose 4 cents per share on revenue of $12 billion, which is below analyst expectations for earnings of 1 cent per share on $11.75 billion in sales. Intel's largest loss in company history surpasses the previous record set in Q4 2017 when it lost $687 million.

As CEO Pat Gelsinger enters his third year at the company's helm, investors are questioning if Intel has hit rock bottom. Gelsinger's turnaround plan involves opening up Intel's factories as foundries to manufacture chips for other companies. Intel aims to compete with TSMC in chip manufacturing by 2026 and is on track to achieve this goal.

Intel's Client Computing group, responsible for the majority of desktop and laptop Windows PCs, reported $5.8 billion in revenue, down 38% on an annual basis. Intel's server chip division under its Data Center and AI segment saw a 39% decline to $3.7 billion. The Network and Edge line of business posted $1.5 billion in sales, down 30% from the same time last year.

However, Mobileye, Intel's self-driving car software subsidiary, reported 16% sales growth to $458 million. Intel also stated that its recent cost-cutting measures, including layoffs, would save about $3 billion in 2023 and up to $10 billion per year by 2025. The company also reported expanding gross margins of approximately 37.5% on a non-GAAP basis in the current quarter, beating FactSet estimates.

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Insight: We classify this news as having a Company Impact. Intel's largest quarterly loss and falling sales directly affect the company and its financial performance. This decline could have implications for company strategy and might alter the competitive landscape for Intel and its market segment.