Intel Corp. shares fell in Thursday’s extended session after the chipmaker stuck to its full-year outlook, forecasting revenue growth at its key businesses in the second half, despite expected weakness this quarter.
Intel INTC, +3.58% shares are down 4% after the close, after gaining 3.6% in the regular session to close at $46.84 and by the end of the conference call with analysts they were down down about 4%.
For the second quarter, Intel is forecasting earnings of about 70 cents a share on revenue of about $18 billion and adjusted gross margins of 51%. However, analysts polled by FactSet are expecting adjusted earnings of 80 cents a share on sales of $18.34 billion for the second quarter.
Still, Intel reiterated its outlook for the year as the company beat earnings per share expectations in the first quarter and barely beat revenue expectations, leaving an expected net deficit for the first half of the year.
All things considered, Intel expects earnings of about $3.60 per share for the year on revenue of about $76 billion. Looking at the year as a whole, analysts seem more skeptical rather than focusing on specific quarters, forecasting $3.37 per share on sales of $74.88 billion.
As a result, with full-year guidance unchanged, Intel is under pressure to deliver in the second half of the year. Even with potential headwinds, Intel CEO Pat Gelsinger said he expects Intel to do just that.
“We have solid growth across all of the company’s businesses,” Gelsinger told analysts on the conference call. “So overall a confirmation for the second half of the year.”
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Intel reported net income of $8.11 billion, or $1.98 a share, for the first quarter, compared to $3.36 billion, or 82 cents a share, in the same period last year. After adjusting for acquisition-related expenses and other items, Intel reported earnings of 87 cents a share, compared to $1.34 a share a year ago.
Revenue declined to $18.36 billion from $19.67 billion in the year-ago quarter. Excluding the company’s divested memory business, the company reported revenue of $18.6 billion in the year-ago period.
Analysts had forecast earnings of 78 cents per share on revenue of $18.33 billion, based on Intel’s guidance of 80 cents per share and revenue of about $18.3 billion.
While Intel is maintaining its outlook for the year, it is doing so in the face of several potential headwinds. Chief Financial Officer David Zinsner outlined a number of advances, including weak consumer and education demand compared to the initial surge in PC sales due to COVID-19, and sales losses to Russia and Belarus.
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“Additionally, component supply shortages remain a challenge as the recent COVID lockdowns in Shanghai further increase risk in the supply chain and contribute to inflationary pressures negatively impacting PC [total addressable market] for the year,” said Zinsner. “As a result, we are seeing OEMs continue to reduce inventories to better meet demand and align with other system components. We expect parts of this stock to continue declining in the second half of the year until Q2 eases further.”
Nevertheless, Zinsner expects the company to expect stronger sales in the data center and client computing segments in the second half of the year.
Intel reported that revenue in its key data center category rose 22% to $6 billion in the first quarter, but fell short of Street’s estimate of $6.78 billion. Revenue from Client Computing, the traditional PC group, fell 13% to $9.3 billion, below Wall Street’s estimate of $9.42 billion. However, Intel has recently realigned its lines of business.
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For the first quarter, Intel reported a gross margin of 53.1% on a non-GAAP basis, up from 58.8% a year earlier. Back in January, Intel had forecast margins of 52% for the first quarter.
Over the past 12 months, Intel stock is down 18%. Over the same period, the Dow Jones Industrial Average DJIA, +1.85% – which counts Intel as a constituent – is up less than 1%, the PHLX Semiconductor Index SOX, +5.58% is down nearly 4%, the S&P 500 Index SPX , +2.47% is up nearly 3% and the tech-heavy Nasdaq Composite Index COMP, +3.06% is down more than 8%.