Chip maker beats expectations, revenue plummets 36%

Intel (INTC) reported its first quarter earnings after the bell on Thursday, barely beating analysts’ expectations on revenue, while losing less per share than anticipated. Still, overall revenue for the quarter collapsed a staggering 36% for the chip maker.

Intel is struggling with a steep decline in both PC and datacenter sales, as consumers and businesses pull back on spelling. PC revenue was off a whopping 38% in the quarter, while datacenter revenue fell $39%.

Here are the most important numbers from the quarter compared to Wall Street analysts are expecting from the company in the quarter compared to data from Bloomberg.

• Revenue: $11.7 billion versus $11.1 billion expected

• Adj. loss per share: $0.04 versus $0.15 expected

• Client Computing: $5.8 billion versus $4.9 billion expected

• Datacenter and AI: $3.7 billion versus $3.5 billion expected

Shares of Intel were down more than 1% following the announcement.

We delivered solid first-quarter results, representing steady progress with our transformation,” Intel CEO Pat Gelsinger said in a statement.

“We hit key execution milestones in our data center roadmap and demonstrated the health of the process technology underpinning it. While we remain cautious on the macroeconomic outlook, we are focused on what we can control as we deliver on IDM 2.0: driving consistent execution across process and product roadmaps and advancing our foundry business to best position us to capitalize on the $1 trillion market opportunity ahead.”

Intel is in the midst of a massive turnaround campaign by CEO Pat Gelsinger, who is working to regain lost market share from rival AMD (AMD) amongst other manufacturers. But the effort is being hamstrung by the company’s poor quarterly performance and relative lack of exposure to the AI boom compared to the likes of Nvidia (NVDA).

Shares of Intel are down as much as 36% over the last 12 months, while AMD shares are roughly flat. Nvidia, which is a major provider of AI chips, is up as much as 43%. And while general market sentiment toward tech names has improved since the start of 2023, with the Nasdaq up 14%, Intel continues to trudge along.

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The company’s share price is up just 9% since January, while AMD has jumped 31% and Nvidia has rocketed up 84%.

Gelsinger, however, is attempting to steer the chip giant toward a new era of growth by building out new fabrication facilities in the U.S., including a massive $20 billion chip plant in Ohio. And ahead of earnings on Thursday, Intel announced a multi-generation collaboration with chip designer Arm.

The move should eventually allow Intel to build Arm-based chips for that company’s licensees, according to Engadget.

But Intel’s larger problem might just be the slowdown in the overall PC market. Consumers and businesses stocked up on new PCs during the pandemic, and as interest rates have jumped, both categories of customers are pulling back on spending on new systems.

According to Gartner, worldwide PC shipments collapsed 30% year-over-year in the first quarter of 2023 to 55.2 million units. That’s the market’s second consecutive quarter of historic declines, according to the research firm.

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

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