This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Intel has now announced its earnings for the first quarter of 2024, posting mixed results relative to the consensus expectations.
Intel (NASDAQ: INTC) Earnings Release for the First Quarter of 2024
For the three months that ended on the 31st of March, 2024, Intel reported $12.724 billion in non-GAAP revenue, exceeding consensus expectations of $12.71 billion.
Revenue (in Billions of Dollars)
Here is the actual performance of Intel's business segments in Q1 2023:
Segmental Revenue (in Millions of Dollars)
If you find charts confusing, here is an alternate view of Intel's segmental revenue:
Do note that Intel has changed the way it reports its earnings. Now, the revenue from CCG, DCAI, and Network and Edge segments will be clubbed under the Intel Products section. Intel's foundry revenue will be displayed in a separate section. Meanwhile, the revenue from Altera, Mobileye, etc. will now be clubbed under the "All Other" segment.
Intel's total segmental revenue amounted to $17.08 billion, including $4.369 billion in revenue recognized in its Foundry division. After accounting for intersegment elimination costs of $4.353 billion, the company's net revenue totals $12.72 billion.
Intel has reported non-GAAP gross margin of 45.1 percent vs. expectations of 44.5 percent. Moreover, the chipmaker has disclosed a GAAP net income of -$437 million. On a non-GAAP basis, the company has earned a net income of $759 million vs. consensus expectations of $580 million.
During the quarter, the company burned $1.2 billion in cash to fund its operations. Its cash and cash equivalents now stand at just below $7 billion.
Finally, Intel earned $0.18 in EPS (non-GAAP), beating consensus expectations of $0.13. Intel had guided to a non-GAAP EPS of $0.13 while announcing its earnings for the fourth quarter of 2023.
Here is the company's guidance for the second quarter of 2024:
Investors have reacted negatively to the company's latest earnings release, with the stock currently down around 7 percent in after-hours trading. The company's GAAP net loss is hurting the sentiment even though it managed to beat expectations on total revenue, gross margin, and non-GAAP EPS. Of course, relatively subdued guidance is also not helping to lift the overall sentiment in the stock.
Important Developments During the Quarter
Intel detailed its foundry strategy at a dedicated event in early April, highlighting a potential path to regaining the edge in chip manufacturing that currently resides with TSMC.
Intel's foundry unit intends to improve its margins and win back lost orders by focusing on areas such as chip expedites and test times.
In response to TSMC's flagship 3-nm node, Intel is now touting its 18A process that leverages a 2-nm node. Expected to launch in 2025, Intel's 18A process has already received five customer commits, with many more presumably in the pipeline.
However, Intel only expects to achieve break-even operating margins on its foundry business by 2030, with 2024 expected to see the absolute nadir in terms of operating losses.
In March, Intel signed a non-binding preliminary memorandum of terms for federal grants of up to $8.5 billion and loans of up to $11 billion under the auspices of the CHIPS Act. The chipmaker had been demanding funds of over $10 billion from the Biden Administration. Gelsinger is on record for stating that the chipmaker deserves a larger share of the CHIPS Act pie for putting its business at risk by siding with the US in its quest to establish absolute dominion over the semiconductor sphere.
Elsewhere, in order to improve its operating margins, the chipmaker has now begun its second round of layoffs under Pat Gelsinger's leadership. Bear in mind that Gelsinger had indicated in October 2022 that the company would try to curtail its expenditure by $10 billion via a mixture of layoffs and other cost-saving measures.
In early April, Intel showcased its next-gen AI accelerator, the Gaudi 3, which is around 40 percent more efficient and 50 percent faster than NVIDIA's H100 GPU.
