Intel’s Q4 Earnings: A Mixed Bag
Beating Estimates, But Falling Short on Guidance
Intel’s fourth-quarter earnings report, released on Thursday, brought a mix of good and bad news for investors. The company beat estimates on both revenue and earnings per share (EPS), but fell short on its Q1 guidance. Despite this, Intel’s stock rose 2% in premarket trading on Friday.
Leadership in Flux
This report marks Intel’s first since the departure of CEO Pat Gelsinger, who was ousted due to frustrations with his turnaround plan. The company is currently led by co-CEOs David Zinsner, who also serves as CFO, and Michelle Johnston Holthaus, who is also CEO of Intel Products. The search for a permanent CEO continues.
Q4 Results: A Tale of Two Stories
For the quarter, Intel reported EPS of $0.13 on revenue of $14.3 billion, exceeding analyst expectations of $0.12 on revenue of $13.8 billion. However, this represents a significant decline from the same quarter last year, when the company saw EPS of $0.54 and revenue of $15.4 billion. Looking ahead, Intel expects revenue between $11.7 billion and $12.7 billion in the current quarter, below analyst expectations of $12.85 billion.
Gross Margins Take a Hit
Adjusted gross margins are also expected to come in at 36%, below the 39% anticipated by Wall Street. This decline is a significant concern for investors, particularly given the company’s struggles in the chipmaking space.
Industry-Wide Challenges
Intel is not alone in its struggles. Rival AMD is down 36% over the last year, while Nvidia continues to thrive, rising 93% despite recent setbacks. The chipmaking industry as a whole is facing significant headwinds, with Intel’s foundry business, which produces chips for both Intel and third-party clients, still struggling to gain traction.
Foundry Business: A Work in Progress
Despite announcing agreements with major clients like Microsoft, the Intel Foundry business brought in $4.5 billion, in line with expectations. However, this segment remains a drag on the company’s overall revenue.
Client Computing and Data Center Businesses
Intel’s Client Computing business, which includes chips for PCs, saw revenue of $8 billion, exceeding expectations of $7.8 billion. The data center business topped out at $3.39 billion, slightly above analyst expectations of $3.37 billion.
PC Market Uncertainty
The PC market, a key driver of Intel’s revenue, remains flat despite promises of AI-driven growth. According to IDC, PC shipments rose just 1% in 2024, with significant uncertainty surrounding 2025.
Data Center Business Struggles
Intel’s data center business is also struggling to keep pace with market leaders like Nvidia. While the company is working to develop its own AI chips, it remains far behind the competition, with no clear timeline for catching up.
A Long Road Ahead
Intel’s Q4 earnings report highlights the significant challenges facing the company. With a new CEO still to be appointed and significant headwinds in the chipmaking industry, Intel’s path to recovery will be long and arduous.
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