The company reported a revenue decline of 22 percent year-over-year which is the company’s largest since 1999. Revenue fell short of analysts’ estimate by 14 percent, according to Refinitiv. Compared to a net income of $5 billion which was recorded in the second quarter of 2021, Intel reported a $454 million net loss for the second quarter of 2022.
Intel also reduced its full-year forecast. The company now expects full-year adjusted earnings per share of $2.30 per share and revenue of between $65 billion and $68 billion.
The company is facing macroeconomic challenges alongside other factors that have taken a toll on its business and others. Companies like Meta, Twitter, and Snap reported disappointing quarterly results also. According to the company’s Chief Financial Officer David Zinsner, the reviewed forecast takes into consideration factors such as economic weakness which may affect the PC refresh cycles of organizations that are looking to save costs. He also added that small and medium businesses have reduced their spending on acquiring new computers. “We do think we’re on the bottom,” Zinsner said adding that the company has been holding up.
“For decades, Intel was able to cover up a litany of failed projects, poor acquisitions, and strategic foibles by pushing Moore’s Law and process leadership. Unless they regain this leadership (we think unlikely), or change strategic direction, we expect growth, profitability, and cash flow problems to persist at Intel.” Analysts from Susquehanna who downgraded Intel shares from neutral to negative said.
Analysts from Baird who also downgraded Intel on the basis of supply chain delays and a change in consumer patterns after the pandemic added that “We are increasingly concerned 20+ year-high inventory days in the PC supply chain could take quarters to unfold, given what we think are structural changes in PC consumer consumption patterns, combined with a seasonally weak first half which would continue to pressure Intel’s utilization rates and gross margin recovery.”
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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