"We Must Do Better" - Intel Plunges after Slashing Revenue Outlook (As CHIPS Act Passes)

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by Tyler Durden
Thursday, Jul 28, 2022 - 08:17 PM

Oh the irony...

On the very day where the sector gets a massive handout from the government as the CHIPS funding bill heads to Biden's desk to be signed, Intel reports top- and bottom-line forecasts for Q2 and slashes its outlook for Q3 and full fiscal year.

For Q2 it was ugly:

  • Adjusted revenue $15.32 billion, estimate $17.96 billion (down from from $19.63 billion in the year-ago quarter)

  • Adjusted EPS 29c, estimate 69c

During the second quarter, Intel’s Client Computing Group, which includes PC chips, generated $7.7 billion in revenue, down 25% and considerably less than the $8.89 billion consensus estimate.

Datacenter & AI revenues massively missed at $4.6 billion (vs $6.04 billion estimate).

The outlook for Q3 was worse:

  • Sees adjusted revenue $15 billion to $16 billion, estimate $18.7 billion

  • Sees adjusted EPS 35c, estimate 82c

  • Sees adjusted gross margin 46.5%, estimate 51.4%

And the full year forecast was worsererer...

  • Sees adjusted revenue $65 billion to $68 billion, saw $76 billion, estimate $74.76 billion

  • Sees adjusted EPS $2.30, saw $3.60, estimate $3.39

  • Sees adjusted gross margin 49%, saw 52%, estimate 51.8%

Intel CEO Pat Gelsinger points to an apparent cliff-dive in the economy (but it's not a recession remember):

"The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues."

Intel's results are " of the worst reports of the whole season, and that’s saying something" according to @knowledge_vital.

Intel's CFO David Zinsner says:

"We are taking necessary actions to manage through the current environment, including accelerating the deployment of our smart capital strategy, while reiterating our prior full-year adjusted free cash flow guidance and returning gross margins to our target range by the fourth quarter"

INTC is down 10% after hours trading attheir lowest sine June 2017...

CEO Gelsinger summed it all up well: "we must and will do better."

With all that freshly printed taxpayer money, you better Pat!