Intel Corporation (NASDAQ:INTC) stock fell 6.28% (As on Jan 27, 11:23:10 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fourth-quarter earnings but provided a mixed outlook for the first quarter. Intel’s largest business, its Client Computing Group, was down 7% year-over-year to $10.1 billion, though it still beat analysts’ average estimate of $9.6 billion, according to FactSet. Intel’s Data Center Group unit also topped expectations, with revenue rising 20% to $7.3 billion, compared to the average estimate of $6.7 billion. Further, the company’s next-generation server chip, Sapphire Rapids, is on schedule to start shipping this quarter and that production will ramp in the second quarter. Analysts had worried about delays for the chip, which is manufactured on a new process. Mobileye, the subsidiary that focuses on self-driving car technology, reported $356 million in sales during the quarter, a 7% annual increase. Intel said in December that it plans to take the unit public in an IPO.
INTC in the fourth quarter of FY 21 has reported the adjusted earnings per share of $1.09, beating the analysts’ estimates for the adjusted earnings per share of 90 cents. The company had reported the adjusted revenue growth of 4 percent to $19.5 billion in the fourth quarter of FY 21, beating the analysts’ estimates for revenue of $18.3 billion.
Intel said it expected $18.3 billion in adjusted sales in the first quarter of 2022, beating consensus analyst expectations of $17.62 billion.
Meanwhile, Intel announced last week it plans to build a chip-making complex in Ohio which could house as many as eight fabs, or chip factories, with production set to begin in 2025. Intel said it would invest at least $20 billion to get the first two factories up and running.
Intel warned last quarter that its margin would shrink over the next two to three years as it invests in additional manufacturing capacity. Even with the lowered expectations, the company’s gross margin forecast for 52% in the first quarter still narrowly missed estimates of almost 53%. The ultimate size of the Ohio complex is linked to legislation that would result in $52 billion in subsidy funding for semiconductor companies. Intel could spend as much as $100 billion if subsidies are approved. Gelsinger appeared at an event with President Biden last week to encourage Congress to pass legislation to authorize the bill’s full funding. The Ohio investment follows plans announced last year to spend $20 billion expanding an existing facility in Arizona.