Published - January 27, 2023 @ 11:38 AM (EET)

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As customers hold back on tech spending amid gloomy market conditions, Intel Corp. (NASDAQ:INTC) gave one of the most dismal quarterly forecast in its history.

In addition, Thursday's fourth-quarter earnings showed a significant loss in sales, profit, and gross margin, further setting back turnaround efforts and sending shares tumbling.

Revenue for the year's final period came in at a loss of $664 million on a 32% decrease in sales to $14 billion, hitting its lowest level since 2016.

Intel, which remains America's largest chipmaker by revenue, expects the gloomy conditions to continue and estimated a surprise loss in the current period and a sales range that missed analysts' predictions by billions of dollars.

Chief Executive Pat Gelsinger said a rocky economic environment is compounded by bloated chip inventories, driving a forecast of between $10.5 billion to $11.5 billion of sales in the current quarter, compared to Wall Street's estimates of $13.9 billion.

WHY IT MATTERS

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In part, the sales slump reflects the sharp downturn the personal computer market has been experiencing in recent months and many additional factors outside the company's control.

The latest results and outlook also highlight some of Intel's current issues with weak product demand and inefficient internal performance. Moreover, the US chip icon has been battling a loss of market share to rivals like Advanced Micro Devices Inc (NASDAQ:AMD).

Following the report, Intel's stock fell over 9% in after-hours trading, threatening to wipe out most of the 14% gains it has made this year.

OTHER RESULTS

Intel's CPUs (Central processing units) revenue fell 36% to $6.6 billion, while PC shipments fell 28.5%. Other primary business line revenue that provides chips for data centers fell roughly 33% to $4.3 billion.

The company said PC shipments would be at the low end of its forecast range of between 270 million to 295 million.

"We readily admit our results and our Q1 guidance are below what we expect of ourselves," said Gelsinger. But, he added, "I'd like to remind everyone that we're on a multiyear journey."

Given the uncertainty, Gelsigner said he wouldn't provide full-year guidance for 2023. It's a painful admission for a company that has been trying a multiyear under Gelsinger's leadership, who took the helm in 2021.

More positively, Intel did not cut its dividend on Thursday, despite spending $6 billion on payouts in 2022.

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