shares fell in late trading on Wednesday after the company reported better-than-expected earnings in the fourth quarter, but provided a mixed outlook for the first quarter.
For the fourth quarter, the company had non-GAAP revenue of $ 19.5 billion, up 4% from a year ago, and adjusted earnings of $ 1.09 per share, down from $ 1.48 a year ago. Analysts had expected non-GAAP revenue of $ 18.3 billion and earnings of 90 cents per share, according to Intel’s own forecast. On a GAAP basis, revenue was $ 20.5 billion, which is better than the company’s forecast of $ 19.2 billion.
The company also announced a 5% dividend increase, increasing payouts to 36.5 cents quarterly.
Intel shares fell 1.6% in after-hours trading.
Intel CEO Pat Gelsinger said in a statement that it was the company’s best revenue ever on a quarterly and full-year basis. “Our disciplined focus on execution across technology development, manufacturing and our traditional and new businesses is reflected in our results.”
Gross margin for the quarter fell to 55.4% from 60% a year ago, while operating margin fell to 25.9% from 32.4%. Earnings per share benefits from a sharp drop in the company’s tax rate to 11.7% from 21.7%. According to generally accepted accounting principles, the company earned $ 1.13 per share during the quarter.
For the full year, Intel reported non-GAAP revenue of $ 74.7 billion, an increase of 2%, while adjusted earnings were $ 5.47 per share, up from $ 5.10 in 2020. GAAP earnings were $ 4.86 per share .
The turnover of the company’s client computer group, which serves the PC market, was $ 10.1. mia.kr. in the quarter, a decrease of 7% compared to a year ago. The data center group’s revenue was $ 7.3 billion, an increase of 20%. The company’s internet of things group had revenue of $ 1.1 billion, an increase of 36%.
For the March quarter, the company sees both GAAP and non-GAAP revenue of $ 18.3 billion, with a profit of 80 cents per share. share on an adjusted basis, or 70 cents below generally accepted accounting principles. Wall Street analysts had expected revenue of $ 17.6 billion and a non-GAAP profit of 86 cents per share. shares.
On the way into the quarter, some analysts thought the results could be a top guide, but for Intel, the focus has been less on short-term performance and more on progress in renewing its business model and building capacity.
Last week, for example, the company announced a plan to invest more than $ 20 billion to build two new chip factories in Ohio. Nearly a year ago, CEO Pat Gellsinger laid out the company’s new production strategy, including a $ 20 billion program to build two new factories in Arizona.
Prior to the report, Morgan Stanley chip analyst Joseph Moore wrote that he did not expect any major surprises this quarter, arguing that the company’s ongoing high capital expenditures are likely to limit the upside of the stock.
Moore, who has an Equal Weight rating on Intel stocks, wrote in a recent preview note that he sees a mixed PC market with strong desktop and enterprise trends, but weaker demand in the notebooks and consumer market. He says server demand is generally stronger, but that Intel continues to see pressure on market shares in the cloud compared to both AMD and ARM-based processors. While Moore believes the stock looks “compelling” on a multiple of sales basis, he says the ongoing high cost of amazing builds “limits our enthusiasm in the long run.”
Susquehanna Financial Group analyst Chrisopher Rolland claimed prior to the report that the consensus estimates for the fourth quarter and first quarter “appear overcome”, given conservative guidance and a strong PC environment. But he believes there are still risks as the trend of working from home disappears by the end of 2022. He says previous shortages of cheap PCs and Chromebooks for the education market have abated. He maintains a neutral rating on Intel shares.
Wedbush analyst Matt Bryson recently reiterated its Underperform rating and $ 45 target price on Intel stocks ahead of the quarter. His view was that while Intel is doing the right thing in increasing investment to restore its prominent position in chipmaking, “the necessary increase in spending over the next few years will necessarily weigh on the company’s performance.” And he notes that the dividend from the investment program will not become a reality until 2023.
Bryson concluded: “As Intel actually remains in limbo through the current year, as changes have not yet manifested in new products, and with measurements still deteriorating as competition weighs on the share, we see no reason to change our view and remain sellers of Intel. ”
Write to Eric J. Savitz at email@example.com