Intel Corp. (INTC), among the largest chipmakers in the world by market value, likely will report personal computing revenue was halved in the first quarter from a year earlier, as inflation and a tech sector slowdown decimate sales.
- Intel is expected to report a 48% drop in personal computing revenue.
- Adjusted earnings per share probably tumbled to -$0.18 from $0.87 the prior-year quarter.
- Consumers and businesses are estimated to have spent 29% less on computers last quarter than the year before.
Intel's revenue is expected to plunge by almost 40% to $11.4 million, according to analysts' estimates compiled by Visible Alpha. The company's personal computing unit, its largest source of revenue, is expected to report a more than 48% drop in sales for the quarter. Earnings are expected to swing to a net loss of over $2.2 billion, or adjusted earnings per share (EPS) of -$0.18, from net income of $8.1 billion, or $0.87 a share, in the prior-year quarter. Intel reports earnings after markets close Thursday.
The contraction of Intel's revenue highlights the challenges facing the broader microchip industry, including rising costs, unstable demand, and persistent supply imbalances. U.S. consumers spent $19.67 billion on electronics and appliances in the first quarter, a 5.3% drop from 2022. Electronics stores and gas stations (-4.5%) were the only types of retail locations in which consumers spent less last quarter than the year before.
Consumer and corporate spending on PCs, specifically, is expected to be 29% lower in the first quarter than a year ago.
"It's pretty much the worst PC year on record," Creative Strategies analyst Ben Bajarin told The Financial Times.
Still, Intel is expanding its product offerings in a bid to bolster waning sales. In the first quarter, the company launched a new line of Xeon Scalable processors as well as the 13th Gen Intel Core mobile processor.
Intel shares have plunged 37% in the last year, while the benchmark S&P 500 Information Technology Sector Index is about flat over the same period.
|Intel Key Stats|
|Estimate for Q1 FY 2023||Actual for Q1 FY 2022||Actual for Q1 FY 2021|
|Adjusted Earnings Per Share ($)||-0.18||0.87||1.39|
Source: Visible Alpha
Visible Alpha. "Financial Data."
Zacks. "Will Sharp Top-Line Contraction Mar Intel (INTC) Q1 Earnings?"
Intel Corp. "Intel to Report First-Quarter 2023 Financial Results."
U.S. Census Bureau. "ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, MARCH 2023." Table 1.
Financial Times. "Chip industry slowdown will last longer than expected, manufacturers warn."