Last week, Intel (INTC) posted a below-standard quarter. The company posted a massive drop in revenue, down by 17.3% Y/Y to $15.3 billion. It earned 29 cents a share non-GAAP. This missed estimates by 41 cents.
Intel lowered its 2022 revenue guidance to $65B - $68B. This is below the $74.4 billion consensus estimates. Still, Intel reiterated its full-year adjusted free cash flow guidance. In Q3, Intel’s revenue will not meet the consensus estimate of $18.7 billion. At $15B - $16B in revenue, it will earn just 35 cents a share.
Intel said that the PC market weakened on the consumer end. Customers are cutting inventory levels at a rate not seen in the last decade.
Consumers are cutting back on spending amid inflation. People need to re-allocate budgets for food and gas, forfeiting the PC upgrade. Intel said it had strong enterprise and high-end PC sales. High-end mobile and desktop product demand grew. CPU average selling prices rose by 11% Y/Y.
CFO David Zinsner said Intel plans to slow hiring. It will optimize cash flow by cutting back capital expenditures by $4 billion to $23 billion. Intel will still expand its supply capabilities. Demand will rebound. In 2024, capital expenditure intensity will rise. By 2025-2026, Intel expects margins will grow, as will revenue.
