Is Intel ($INTC) a Good Price & Good Company ? Read to Find Out !
This will be my afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
To that I have asked, "why not both" ?
Wouldn't that have more upside comparatively speaking ?
Having covered a handful of US banks and some Non-bank companies; I am keen to take this analysis to a Tech Titan company for a change.
Let's take a look at Semiconductor stock $Intel(INTC)$ , its Q4 2022 earnings and see if it still fits the bill.
Sidetrack: Below is what I have covered; to test out this theory.
- Microsoft - Click here to read. Like the post ok. Tks.
- Netflix - Click here to read. Likethe post ok. Tks.
- Goldman Sachs - Click here to read. Likethe post ok. Tks.
- Morgan Stanley - Click here to read. Likethe post ok. Tks.
- BlackRock - Click here to read. Likethe post ok. Tks.
- UnitedHealth Grp - Click here to read.
- Citigroup - Click here to read.
- JP Morgan - Click here to read.
- Bank of America - Click here to read.
- Wells Fargo Inc - Click here to read.
- Jefferies Financial Group - Click here to read.
- an American multi-national corporation and technology company
- it was the world's largest semiconductor chip manufacturer by revenue,
- Intel was founded in 18 Jul 1968 (54 years old company)
- Founders were Gordon E. Moore & Robert Noyce - a physicist and co-inventor of the integrated circuit.
- Went public on 13 Oct 1971 at $23.50 per share.
- Similar to Microsoft, Intel's brand name is concatenated of two words - "INT"egrated & "EL"ectronics
- Enjoyed the biggest market share in both the (a) overall worldwide PC microprocessor market and (b) mobile PC microprocessor
- In 2022, Intel ranked #46 in Fortune 500 list of the largest US corporates by Total Revenue.
- Like other Mega cap companies, Intel grew to its present size via strategic mergers and acquisitions (M&A).
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did chip maker Intel fare ?
Current stock price < 28 Jan 2022 stock price by -41%
Intel - Summary
Intel's Total Revenue - Contribution breakdown composition
- Revenue came in at $14 Billion vs $20.5 Billion (Q4 2021); that is -32% (QoQ).
- Net Income has been replaced by Net Loss (GAAP) of -$664 Million vs $4.6 Billion (Q4 2021); that is -114% (QoQ).
- Earnings per share has been replaced by Loss Per Share (GAAP) of -$0.16 vs $1.13 (Q4 2021); that is -114% (QoQ).
- It is the first time that Intel will lose money in sequential quarters in at least 3 decades, according to data from S&P Market.
- If you looked carefully, its the "old" technology (eg. client computing, data centre & network) thats not bringing in sufficient dole in Q4 2022.
- Client Computing Group, that includes PC chips, contributed $6.63 Billion vs market expectation of $7.68 billion. QoQ revenue fell by -36%.
- Data Center and AI segment (server chips, memory & field-programmable gate arrays, recorded) came in with $4.30 Billion beaten market expectations of $4.17 Billion. However, QoQ, it fell by -33%. Intel attributed decline to (a) competitive pressure & (b) decline in market size.
- Network and Edge segment (networking products) came in with $2.06 Billion vs market expectations of $2.26 Billion. QoQ, it fell by > 99%.
- At the same time, its the next "phase" technology (eg. autonomous driving, accelerated computing & outsourcing customization) that have registered healthy growth. Refer to below diagram for details.
Intel's "Next Phase" technology revenue composition
Intel - Other information
Intel's CEO on Q4 2022 Results:
“Despite the economic and market headwinds, we continued to make good progress on our strategic transformation in Q4, including advancing our product roadmap and improving our operational structure and processes to drive efciencies while delivering at the low-end of our guided range.
In 2023, we will continue to navigate the short-term challenges while striving to meet our long-term commitments, including delivering leadership products anchored on open and secure platforms, powered by at-scale manufacturing and supercharged by our incredible team.... Intel, CEO - Pat Gelsinger
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With Q4 2022 Earnings Announced, Is Microsoft is Both A Good Price and Good Company ?
To arrive at a salient conclusion, there is a need to know Intel's outlook for 2023 !
Intel's Q1 2023's Forecast & 2023 Outlook
- The triple-whammy that Intel encountered ie (a) a broad industry downturn, (b) stiff competition, and (c) a costly turnaround plan seemed to continue to plaque it (refer to above Q1 2023 Outlook).
- This Tech giant however is not sitting still and accepting fate.
- It will be lengthening the useful life of some equipment from 5 years to 8 years. By doing so, the "savings" will boost 2023 gross profit by +$2.6 Billion.
- Capitalising on its strength in the area of core processor, Intel's Data Centre & AI (DCAI) launched its 4th Gen Intel® Xeon® Scalable processors in Jan 2023; with the support of customers & partners such as Dell Technologies, Google Cloud, Hewlett Packard Enterprise, Lenovo, Microsoft Azure, NVIDIA and many others,
- It is ramping production to meet the new strong (core processor) backlog of demand.
- Intel's "next phase technology" segment - Intel Foundry Services would be MediaTek's chip manufacturer.
- MediaTek's outsourced contract could not have come at a "better" time when business conditions are driving near-term under-loading in Intel's factory network”.
- On 5 Nov 2019, Mobileye has entered into a strategic partnership with Chinese luxury EV maker NIO to jointly develop L4 autonomous driving vehicles. This is definitely a positive news that is simmering quietly in the background.
[ Sidetrack ] - What Is Under-load ?
- Under-load charges, refer to accrue when factories are underutilized. It narrowed Intel’s Q4 2022 Gross margin by -2.2% or -220 basis points (2.2%)
- In Q1 2023, loading issue will hurt gross margin by 400 basis points. Loadings is expected to improve once Intel gets past the inventory correction, ... said Intel-CFO, David Zinsner..
Discounting the fact that Intel is currently building a state of the art Centre of Excellence at Ohio that if goes according to plan will be in production in 2025 :
- Do you think Intel will be able to weather its current internal storm ?
- Do you think Intel will once again be at the forefront of semi conductor technology after this rough patch ?
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Tks for reading my post.
Pls "LIKe" it ok. Tks.
The rating is very important to me. Tks tks!!