Intel falls as it reports an unprofitable second quarter

Intel CEO Pat Gelsinger pictured during the ‘Chips for health’ event at the Grischa Hotel at the World Economic Forum in Davos, Switzerland, on May 24, 2022.

The chipmaker reported second-quarter results and quarterly and full-year guidance that fell short of analysts' expectations.

The company did what it was supposed to.

• Earnings: 29 cents per share, adjusted, vs. 70 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $15.32 billion, vs. $17.92 billion as expected by analysts, according to Refinitiv.

According to a statement, Intel's revenue declined in the quarter that ended July 2. In the year-ago quarter, the company had $5 billion in earnings. The gross margin was lower in the previous quarter.

The CEO said that the results were below the standards set for the company. We need to and will do better. The biggest driver was the sudden and rapid decline in economic activity.

35 cents in adjusted earnings per share was called for by Intel. The analysts had expected adjusted earnings per share to be 86 cents.

The company lowered its expectations for the year. Full-year adjusted earnings are now expected to be $2.30 per share and $65 billion to $68 billion. Three months ago, the guidance was for adjusted earnings per share to be $3.60 The analysts had been looking for earnings of $3.42 per share and revenue of $74.34 billion.

The Client Computing Group, which includes PC chips, generated $7.7 billion in revenue in the second quarter, down 25% from the same period a year ago and less than the $8.89 billion consensus estimate among analysts. PC shipments declined in the third quarter, according to a research firm. Higher unit costs and softer demand for PCs in the consumer and education markets were flagged by Intel in a presentation to investors.

The Datacenter and Artificial Intelligence segment, which includes server chips, accelerators, memory and field-programmable gate array, contributed $4.7 billion in revenue, which was down 16% from the previous year. The unit's revenue was hurt by competitive pressures.

The Network and Edge segment, which houses the company's networking products, generated $2.3 billion in revenue, up 11% and barely higher than the $2.27 billion Street Account consensus.

The Habani Gaudi2 artificial-intelligence training chips compete with A 100 graphics cards. Intel wants Congress to pass federal legislation so that it can build a plant in Ohio. The Chips and Science Act was sent to the President by the House.

The S&P 500 index has declined less than 15% over the same period, but Intel shares have fallen by more than 25%.

The results will be discussed on a conference call by executives. There is an hour and a half later.

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The net loss for the quarter was misstated. It was almost half a billion dollars.

If Intel gets help from the government, it will help them spend this money.