Intel prepares for vital earnings report following leadership changes.
Intel is gearing up to reveal its fourth-quarter earnings report post market close this Thursday, carrying the weight of CEO Pat Gelsinger’s recent departure. Gelsinger’s exit came after mounting frustrations over Intel’s slow-paced efforts to stage a comeback amidst ambitious initiatives. Currently, Intel is being overseen by interim co-CEOs David Zinsner, also acting as CFO, and Michelle Johnston Holthaus, who concurrently holds the position of CEO of Intel Products. Despite the current interim leadership, Intel is in the process of selecting a permanent CEO to spearhead its long-term strategy and upsurge its status in the semiconductor sector.
The past year has been a tumultuous one for Intel, evident in its stock plunging by 54% over the last 12 months, culminating in the largest quarterly loss in the company’s history last quarter. However, Intel isn’t alone in its strife, as rival AMD has also seen its stock tumble by 36% within the same timeframe. In stark contrast, Nvidia has seen its stock soar by 93% in the last year, marking a notable feat in the industry.
Intel’s foundry division, aimed at both manufacturing its own chips and offering third-party production services, continues to be a drag on the company’s overall revenue. Despite securing deals to manufacture chips for tech giants like Amazon Web Services and Microsoft, the foundry business is still in its nascent stages and has yet to drive substantial profitability for Intel.
Analysts are predicting that Intel will report earnings of $0.12 per share on a revenue of $13.8 billion for the quarter, a significant decline from the $0.54 per share and $15.4 billion in revenue reported during the same period last year. Projections for Intel’s Client Computing division, encompassing PC chips, indicate a revenue of $7.8 billion, down from $8.8 billion a year ago. Conversely, the data center business is anticipated to dwindle to $3.3 billion from $3.9 billion.
A ray of hope for Intel shines through its foundry segment, expected to reach $4.5 billion in revenue, a sharp rise from $291 million in the fourth quarter of 2023. The company is actively expanding its U.S.-based chip manufacturing and research facilities, yet the PC market remains sluggish despite hopes that AI-powered systems could revive demand in 2024.
According to Ryan Reith, group vice president at IDC’s Worldwide Device Trackers, looming economic uncertainties continue to overshadow the potential growth of AI PCs. While on-device AI is projected to have a positive impact on the industry, Reith cautions that the awaited market shift might take longer than initially anticipated.
Challenges also persist in Intel’s data center division as it struggles to compete with Nvidia, the reigning champ of the AI chip market. Despite Intel’s efforts to develop its AI hardware, it lags behind its competitors with an uncertain timeline for bridging the gap.
With leadership instability and industry challenges looming large, Intel’s upcoming earnings report will serve as a litmus test of its capability to regain momentum in an industry rife with competition.
