Intel admitted to reaching the bottom - the second quarter ended with a net loss of $454 million

Intel admitted to reaching the bottom - the second quarter ended with a net loss of $454 million

After the closing of the bid, Intel's equity rate dropped by 8.23% yesterday, as the company had completed the second quarter with a serious decline in revenue, failing to meet the expectations of analysts. Net losses of $454 million also did not encourage investors, but the financial director Intel tried to calm the public by saying that the bottom had already been reached, and then the company's financial performance would only improve.

Moreover, Intel's rate of return has consistently declined from 50.4 per cent to 36.5 per cent, illustrating the increase in expenditures while revenue falls simultaneously. Intel's total revenue in the last quarter has declined by 17 per cent or even 22 per cent, depending on the calculation methodology, to $15.32 billion. This is 14 per cent less than the analysis estimated, and is in line with the anti-record in terms of market expectations since 1999.

The company's CEO, Patrick Gelsinger, stated at a quarterly report event that the sudden and sharp decline in client economic activity had been the main reason for the decline in the company's revenue during the reporting period, and Intel had to spend impressive sums on the development of new products, the introduction of new technologies and the promotion of discrete graphic solutions to the market.

Intel hopes to return the rate of return and the free flow of money to the target level in the second half of the year. Helsinger has not missed the opportunity to report on the company ' s achievements during the second quarter. More than 35 million Alder Lake processors, released using Intel 7, which in the old hierarchy was considered to be the last generation of 10 nm processors, are ready to begin production on Intel 4 during the second half of the year. Intel 3, 20A and 18A technologies, according to the company ' s manager, are now available on schedule or even ahead of schedule. In this six months, the company hopes to start developing digital projects as many products that will be produced on Intel 3 and 18A technologies in the future, not only for their own use, but also for outside clients.

Since Helsinger's return to Intel last February, he noted that a six-track decision had been taken, and that had released about $1.5 billion for investment in the IDM 2.0 strategic programme. The current tense economic environment did not diminish Intel's desire to regain technological leadership by 2025 and achieve parity in lithography with competitors as early as 2024.

The PC market is projected to decrease by 10 per cent in 2022, although weak demand will be expressed less in the upper price segment and the corporate sector. In the second quarter, in the company ' s management ' s view, Intel clients received fewer components than they would have been required if there were no increased stocks. They will be reduced at a record rate, as Helsinger believes, and therefore the supply of PC components can return to growth in the second half of the year. In general, annual PC sales should remain at over 300 million, while the number of computers over four years old has reached 600 million, and they should be upgraded in the foreseeable future.

Overall, Intel ' s revenue to client calculations declined by 25 per cent to $7.7 billion annually, the operating surplus fell by 73 per cent to $1.1 billion, and the operating rate declined from 39 per cent to 14 per cent. In the decline in demand for PCs, the company blames consumer and educational segments, as well as the availability of increased stocks from manufacturers. The increase in the cost of Intel ' s products has been cited as one of the factors contributing to the decline in operating revenues in the second quarter, and the average cost of selling the processor in the second quarter has risen by 11 per cent because of the shift in demand towards more expensive models in both the desktop and mobile segments.

The company hopes to start supplying the Raptor Lake processors in the current half-year, and next year to present Meteor Lake processors. The Raptor Lake family first debuts in the desk segment this fall, and in the mobile, it will be introduced towards the end of the semester, providing a double-digit increase in speed as a percentage of Alder Lake and compatibility at the processor level. The Meteor Lake processors will be released using Intel 4 technology in 2023, and their samples are already working at both the company's own laboratories and on the side of its clients.

Intel specialists have already started to create digital Granite Rapids, which will be released using Intel 3 technology, but it is a server product rather than a consumer product. In the current quarter, the Granite Rapids first stepping engineering designs are already scheduled to be launched on a test bench.

In the server segment, it's not as dark as it is. In the second quarter, the company had to face a 16% reduction in server revenue to $4.6 billion, but in the long run, Intel's management expects a 15% 16% increase in the segment revenue per year. The operating surplus in the server segment in the second quarter fell 90% to $0.2 billion, and the operating rate was down from 38% to 5%. The company's negative factors included a decline in the average price of server processors due to changes in demand patterns, as well as competitive pressures. Business income also reduces the need to invest in the development of new products and the introduction of new lithographic standards.

Intel has had to admit that this year the company will not be able to achieve the previously planned figures for the number of graphic processors shipped, but in terms of revenues, it will pass over $1 billion per year. From the second quarter, mobile discrete Arc graphic solutions will be supplied to the largest laptop manufacturers. In the third quarter, the company will start delivering discrete Arc A5 and A7 desktop cards. This year, Intel also expects to supply several million Blackscale miners, although not originally planned. Intel's revenue increased by 5% to $186 million per year, but operating losses increased from $168 million to $507 million for the company, which is still lost.

The demand for components for active driver's assistance systems has enabled the company to raise its business profile by 41% to record $460 million, with operating gains rising by 43% to $190 million. This year, Mobileye is expected to make public shares. Finally, the new reporting structure's contract line of business brought Intel no more than $122 million in the second quarter, 54% less than the year before. Operating losses of $155 million in the company are partly attributable to the high cost of expansion of the contract business, as well as to reduced demand from auto producers who had to cope with the deficit of other components.

But now Intel can boast of agreements not only with MediaTek, but also with six of the top ten chip developers in total, of whom there are already clients in the 18A process. The company has already formed $6 billion in contractual obligations, and more than 30 clients are preparing to obtain the first engineering samples of its product from Intel.

Intel's financial director, David Zinsner, added that before the end of the year, the company would not only have to limit the hiring of new staff but also reduce capital spending. By the end of the year, he said that a recession scenario could materialize in the world economy, and that the impact of the pandemic should not be completely written off. This year, Intel expects to earn between $65 billion and $68 billion, which is lower than the company's previous forecast of $76 billion. Intel's client income could grow in the second half of the year, although the overall market capacity would decline by 10 per cent after the end of the year.

Intel's rate of return to the fourth quarter is expected to reach 51% at least, but for the year as a whole it will still not exceed 49%. Finally, the company's capital spending should be reduced from $27 billion to $23 billion. This would not prevent the equity dividend of $1.5 billion per quarter at the same time. In just three quarters, the company will pay more than $4.5 billion in dividends, and in the face of a $4 billion reduction in capital spending, it looks like a waste, but not in the eyes of the shareholders. In the third quarter, the company expects to earn between $15 billion and $16 billion per quarter. The current quarter's profit rate will be around 46.5%.

According to Intel's financial director, the second and third quarters of this year, in terms of financial performance, will be a "d" from which it can push for further growth.