Intel Corporation (NASDAQ: INTC) posted better-than-expected results for the first quarter of 2022, with revenues and surprise sales coming in at 8.8% and 0.5%, respectively.
Shares of this $ 191.5-billion tech-giant rose 3.6% to close at $ 46.84 on Thursday. At the time of writing, the stock was down 3.5% in the pre-market trading session on Friday.
Financial Highlights
Intel’s earnings were at $ 0.87 per share in the first quarter, higher than the consensus estimate of $ 0.80 per share and the company’s January projection of $ 0.80 per share. However, the bottom line dropped 35.1% year-on-year due to poor sales generation and higher costs and expenses.
Revenues at $ 18.4 billion were higher than the consensus estimate of $ 18.31 billion and the company’s projection of $ 18.3 billion. On a year-on-year basis, the company’s non-GAAP revenues dropped 1.1%.
Client Computing segment revenues for the quarter were $ 9.29 billion, down 13.3% from the previous quarter due to a 14.3% decrease in desktop revenues and a 30.4% decrease in notebook revenues.
Revenues from the Datacenter and AI segments increased 22.1% to $ 6.03 billion, while those from Network and Edge expanded 23% to $ 2.21 billion. Revenues of the Accelerated Computing Systems and Graphics segment grew 21% to $ 219 million, and revenues of the Mobileye segment grew 4.5% to $ 394 million.
Revenues of Intel Foundry Services and All Other segments rose 174.8% to $ 283 million and dropped 96.1% to $ 67 million, respectively.
Sales values were at $ 9.11 billion, up 3.3% year-on-year. Total non -GAAP revenue of $ 9.75 billion is down 10.8% from the previous quarter. The margin dropped by 570 basis points (bps) to 53.1%.
Non-GAAP R&D and MG&A increased 25.1% to $ 5.5 billion. Operating income (non-GAAP) dropped 35% to $ 4.24 billion, and margin dropped 1200 bps to 23.1%.
Balance Sheet and Cash Flows
Coming out in the first quarter, Intel’s cash and cash equivalents of $ 6.22 billion showed an increase of 28.8% from the previous quarter. Debt at $ 32.79 billion dropped 2.2% consecutively.
Net cash flow was $ 5.89 billion from operating activities, reflecting year-over-year growth of 10.2%. Capital expenditure was $ 4.6 billion, up 15.9% from the previous quarter. The adjusted free cash flow for the quarter was $ 5.55 billion.
Projections
For the second quarter of 2022, Intel expects non-GAAP revenue to be approximately $ 18 billion, and revenues will be $ 0.70 per share. Gross margin for the quarter is expected to be 51%.
In 2022, the company’s non -GAAP revenue is expected to be $ 76 billion and revenues are likely to be $ 3.60 per share. Also, the total margin is expected to be 52%. Additionally, the company expects capital expenditure to be $ 27 billion and adjusted the free cash outflow to be $ 1-2 billion.
Official Comment
Intel CEO Pat Gelsinger said, “With a $ 1 trillion market opportunity ahead of us, we remain laser focused on our IDM 2.0 strategy.”
“We successfully executed that approach in Q1, delivered key product and technology milestones and announced plans to expand our manufacturing capacity in both the U.S. and Europe to meet continued demand for semiconductors and drive a more balanced, resilient global supply chain, ”he said. added.
Capital Placement
In the first quarter, Intel distributed dividends of $ 1.49 billion and avoided repurchasing any shares. However, the company paid dividends of $ 1.41 billion and repurchased shares worth $ 2.3 billion last year.
Stock Rating
On April 28, Rosenblatt Securities analyst Hans Mosesmann reiterated a Sell rating on Intel with a target price of $ 40 (14.6% downside potential).
Four days ago, Randy Abrams of Credit Suisse assumed coverage on the stock with a Buy rating and a target price of $ 70 (49.44% upside potential.
Overall, Intel has a Hold consensus rating based on six Buy, 12 Hold, and seven Sell. Intel’s price forecast of $ 52.24 suggests 11.53% upside potential from current levels.
Intel shares are down 19.6% in the past year.
Hedge Fund Holdings
According to the TipRanks Hedge Fund tool, confidence in Intel is currently Very Negative, as the cumulative change in holdings in all 33 hedge funds active in the last quarter dropped by 9.8 million shares.
Conclusion
Intel is well positioned to benefit from a large addressable market. It focuses on enhancing technological and manufacturing capabilities as well as building a stable supply chain.
However, higher costs and expenses, weak margins, and a very good balance are some issues that need to be carefully addressed.
Discover new investment ideas using data you can trust.
Read the full Disclaimer and Disclosure
Related News:
ServiceNow shares Up 8% on Q1 Beat
Will Starbucks Stock Rebound in Q2 Earnings?
How Did Rivian Affect Amazon’s Poor Q1 Results?