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Post: Earnings Results: Intel stock declines as earnings outlook misses Street view following beat on quarter

Intel Corp. shares fell in the extended session Wednesday after the chip maker’s earnings forecast fell short of Wall Street expectations as profit margins slipped, even as it topped forecasts for the quarter.

Intel
INTC,
+1.35%

shares declined 3% after hours, following a 1.4% gain in the regular session to close at $51.69.

Intel reported fourth-quarter net income of $4.62 billion, or $1.13 a share, compared with $5.86 billion, or $1.42 a share, in the year-ago period. After adjusting for acquisition-related expenses and other items, Intel reported earnings of $1.09 a share, compared with $1.52 a share from a year ago.

Revenue rose to $20.53 billion from $19.98 billion in the year-ago quarter. Excluding the company’s divested memory business, revenue came in at $19.53 billion, up from $18.86 billion in the year-ago period.

Analysts expected adjusted earnings of 90 cents a share on revenue of $18.33 billion, based on Intel’s forecast of 90 cents a share and revenue of about $18.3 billion.

Gross margins for the quarter declined to 53.6% on a GAAP basis from 56.8% a year ago, and to 55.4% on a non-GAAP basis from 60% a year ago. Intel had forecast margins of 53.5% for the fourth quarter, and Intel Chief Executive Pat Gelsinger assured analysts that margins would remain “comfortably above 50%”

Last quarter, Intel caught the ire of many analysts who were concerned the company’s aggressive capital buildout plans would weigh too heavily on profit margins. Those pressured margins appear to have pushed the company’s earnings forecast below Wall Street expectations. Intel forecast GAAP gross margins of 49%, and non-GAAP margins of 52% for the first quarter.

For the first quarter, Intel forecast revenue of about $18.3 billion, and GAAP earnings of 70 cents a share and non-GAAP earnings of 80 cents a share. Analysts on average expected adjusted first-quarter earnings of 86 cents a share on revenue of $17.61 billion.

For the fourth quarter, revenue in the important data-center category surged 20% to $7.3 billion, above the Street’s estimate of $6.73 billion.

Revenue from client computing, the traditional PC group, declined 7% to $10.1 billion compared with Wall Street’s estimate of $9.59 billion.

Read: Chips may be sold out for 2022 thanks to shortage, but investors are worried about the end of the party

Nonvolatile memory solutions revenue declined 18% to $1 billion when analysts expected $1.06 billion; “Internet of Things,” or IoT, revenue rose 36% to $1.1 billion versus the expected $1.06 billion; and Mobileye revenue rose 7% to $356 million versus the Street’s expected $355.1 million.

The company also said its board hiked the annual dividend by 5% to $1.46 a share.

Read: Chip sector flirting with bear-market territory as semiconductor earnings kick off

This quarterly report also marks the first earnings call with Chief Financial Officer David Zinsner on board. Zinsner, who officially started last week, is the former CFO of Micron Technology Inc.
MU,
+1.55%
.

Read: The pandemic PC boom gave personal computers their biggest year in nearly a decade

Wednesday’s earnings report comes on the heels of a report earlier in the day that Intel won its appeal against a $1.2 billion EU antitrust fine.

Late Tuesday, Texas Instruments Inc.
TXN,
+2.51%

kicked off earnings season for U.S. chip makers, reporting quarterly results and an outlook that topped Wall Street expectations.

Earlier in the month, Intel said at CES it was releasing its “Alchemist” Arc ray-tracing graphics chip to compete with the likes of Nvidia Corp.
NVDA,
+2.01%

and Advanced Micro Devices Inc.
AMD,
-0.38%

in the hot GPU market.

AMD reports its earnings on Tuesday, and Nvidia is expected to report around Feb. 17, coincidentally, the same day as Intel’s annual investor meeting.

Over the past 12 months, Intel stock has fallen 5%. Over the same period, the Dow Jones Industrial Average  
DJIA,
-0.38%

— which counts Intel as a component — has gained 12%, both the PHLX Semiconductor Index
SOX,
+1.68%

and the S&P 500 index 
SPX,
-0.15%

have advanced 15%, and the tech-heavy Nasdaq Composite Index
COMP,
+0.02%

has ticked 2% higher.

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