Intel(US:INTC)2023-04-27 16:00Financial Performance - Total revenue for Q1 2023 was $11.7 billion, down $6.6 billion or 36% from Q1 2022, with CCG revenue decreasing by 38%, DCAI by 39%, and NEX by 30%[9] - Gross margin decreased by 14.7 percentage points from Q1 2022, and diluted EPS fell by $2.64 or 133% from Q1 2022[11] - Operating cash flow decreased by $7.7 billion or 131% from Q1 2022, primarily driven by a net operating loss[13] - Total comprehensive loss for Q1 2023 was $2.625 billion, compared to a comprehensive income of $7.991 billion in Q1 2022[18] - Net income for the three months ended April 1, 2023, was a loss of $2,768 million, compared to a profit of $8,113 million for the same period in 2022[20] - Total operating loss for the three months ended April 1, 2023, was $1.468 billion, compared to an operating income of $4.341 billion for the same period in 2022[24] - Net loss attributable to Intel for the first three months of 2023 was $2.758 billion, a significant decline from a net income of $8.113 billion in the same period last year[28] - Operating income decreased by 81% from Q1 2022, resulting in an operating margin of 9%[75] Revenue Breakdown - Client Computing segment revenue decreased to $5.767 billion from $9.322 billion, representing a decline of 38.5% year-over-year[24] - Data Center and AI segment revenue fell to $3.718 billion, down 38.9% from $6.074 billion in the prior year[24] - Notebook revenue decreased to $3.4 billion, down $2.6 billion from Q1 2022, with a 37% drop in volume due to inventory reduction and lower demand[73] - Desktop revenue fell to $1.9 billion, down $762 million from Q1 2022, with a 32% decrease in volume driven by lower demand in small and medium business segments[73] - DCAI revenue decreased 39% from Q1 2022, with server volume down 50% due to reduced demand and inventory adjustments[79][94] - NEX revenue was $1.5 billion, down $650 million or 30% from Q1 2022, as customers reduced purchases in response to lower demand[83][94] Cash Flow and Assets - Cash and cash equivalents decreased to $8,232 million from $11,144 million, a decline of 26.0%[20] - Cash flows used for operating activities were $(1,785) million for the three months ended April 1, 2023, compared to $5,891 million in the same period of 2022[20] - Total current assets decreased to $48,314 million from $50,407 million, a decline of 4.1%[19] - Total assets increased to $185,303 million as of April 1, 2023, compared to $182,103 million at December 31, 2022, reflecting a growth of 1.2%[19] - Total liabilities decreased to $84,900 million from $89,850 million, a reduction of 5.5%[19] - Total stockholders' equity decreased to $100,403 million from $103,286 million, a decline of 2.8%[21] Research and Development - Research and development expenses for Q1 2023 were $4.1 billion, compared to $4.4 billion in Q1 2022[16] - Total R&D and MG&A expenses for Q1 2023 were $5.4 billion, down 11% from Q1 2022, representing 46.2% of revenue[100] Strategic Initiatives - The company is committed to its IDM 2.0 strategy and plans to enhance its manufacturing capabilities and product offerings[4] - The restructuring program initiated in 2022 is expected to be substantially completed by the end of 2023, with total restructuring and other charges of $64 million recorded in the first quarter of 2023[33] - The organizational change to integrate AXG into CCG and DCAI aims to enhance go-to-market capabilities and reduce costs[72] Market Conditions - The company faced an uncertain macroeconomic environment, impacting consumer and enterprise demand due to inflation and higher interest rates[9] - The company expects macroeconomic uncertainty and a challenging market environment to persist throughout 2023[93] Legal and Regulatory Matters - A charge of $2.2 billion has been accrued related to ongoing litigation involving VLSI[63] - The European Commission has reopened its administrative procedure to determine a fine against the company based on alleged conduct related to preventing sales of specific rival products[65] - Multiple securities class action lawsuits were filed against the company following the July 2020 announcement of 7nm product delays, with the court granting a motion to dismiss in March 2023[67] Equity and Debt - The company issued $11.0 billion in senior notes in Q1 2023 for general corporate purposes, including refinancing and capital expenditures[109] - The fair value of issued debt increased to $45.9 billion as of April 1, 2023, compared to $34.3 billion as of December 31, 2022[51] - The company has an ongoing authorization to repurchase up to $110.0 billion in common stock, with $7.2 billion remaining available as of April 1, 2023[125] Product Developments - The 13th Gen Intel® Core™ mobile processor family was introduced, including the first 24-core processor for laptops[14] - DCAI launched the 4th Gen Intel® Xeon® Scalable processors, aimed at accelerating workloads including AI[14] - NEX introduced the 4th Gen Intel Xeon Scalable processors with Intel vRAN Boost, integrating Layer 1 acceleration into the Xeon SoC[14] Investment and Acquisitions - The acquisition of Tower Semiconductor is expected to have a total enterprise value of approximately $5.4 billion, with each share converting to $53 in cash[44] - The divestiture of the NAND memory business to SK hynix Inc. was completed for $9.0 billion, with $7.0 billion received in the first phase and a pre-tax gain of $1.0 billion recognized[45]