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Intel beats earning estimate, but down

Now it's up. The market does not seem to know what to make from Intel's earnings, not surprising since there is a lot of financial engineering at Intel.

Personally I think Intel is in a difficult spot. Cash burn really accelerated this quarter and the company raised $10b in debt. Next quarter they may need another $10b. In fact I believe Intel will need to burn cash for the next several years as it builds out and ramps it's new fabs. Competition is a big concern as well. AMD likely is continuing to gain share, and ARM processors are picking up steam both in client (Apple M series, Qualcomm Oryon coming soon) and Data Center (AWS Graviton, Ampere). So a recovery in computing does not necessarily mean a recovery for Intel.

All of the above said, the market may be too bearish on Intel's potential turnaround. If they succeed then the stock is probably undervalued, but currently it's a stock in no mans land - neither a value nor a growth play, but a speculative turnaround play.
 
count said:
Now it's up. The market does not seem to know what to make from Intel's earnings, not surprising since there is a lot of financial engineering at Intel.

Personally I think Intel is in a difficult spot. Cash burn really accelerated this quarter and the company raised $10b in debt. Next quarter they may need another $10b. In fact I believe Intel will need to burn cash for the next several years as it builds out and ramps it's new fabs. Competition is a big concern as well. AMD likely is continuing to gain share, and ARM processors are picking up steam both in client (Apple M series, Qualcomm Oryon coming soon) and Data Center (AWS Graviton, Ampere). So a recovery in computing does not necessarily mean a recovery for Intel.

All of the above said, the market may be too bearish on Intel's potential turnaround. If they succeed then the stock is probably undervalued, but currently it's a stock in no mans land - neither a value nor a growth play, but a speculative turnaround play.
Click to expand...
Yeah, it's up now, seemed strange. The earnings are quite good, but only compared to expectations.

Not sure where you get the information about AMD gaining share. They are getting hammered, and fell below 20% in both mobile and desktops. Servers probably not, since Intel said server market share was stable. If they lost any, it would be minor.

Given their losses in CCG, it's obvious they are gaining market share, since the market is down, and Intel's sales were only down slightly more than the market (remember, it should be way down, because inventory burn). So, it's much more likely AMD lost market share in mobile and desktops, and remained about the same in servers, since Intel's revenue from both CCG and DCAI were higher than expectations.
 
count said:
AMD has gained in overall x86 marketshare.

wccftech.com

AMD Grabs Over 30% CPU Market Share As Intel Continues To Decline

AMD has achieved a historical market share of over 30% within the server CPU segment thanks to its EPYC CPUs.
wccftech.com wccftech.com

This is only up to date up to Q4 2022, so it is possible that they have turned around share losses this quarter.
Click to expand...
The only market share gains they had were because the previous quarter had a horrible market share loss. That's why Q to Q look OK, because Q2 to Q3 was absolutely horrific. https://wccftech.com/intel-claws-ba...e-from-amd-in-latest-mercury-research-report/

And that was a quarter ago. In it, they barely gained market share in servers, and Intel said in earnings server market share was stable. But, based on their much better than expected revenue in CCG, and Intel leadership strongly implying market share gains (saying people are choosing Intel more and more, or something like that), everything points to Intel gaining market share. Certainly saying AMD probably gained market share is not something that can't be contested. It is possible, I guess, but it's very unlikely.

Edit: Just after posting this, Gelsinger mentioned they were gaining market share.
 
VCT said:
I don't get it. What is the good news for Intel earning release Q&A?
Click to expand...
Everything is relative, so it's really, not good, but it's better than what was expected. Revenue and profits were both better. Gaining market share. All nodes on time or ahead. Sampling of upcoming processors going well.
But, yeah, outside of context, it's not good. But, it's just not as bad as was expected. That's why I don't like buying companies that are doing well, because they are expected to continue doing well. Not a fan of TSMC at these levels. Intel is priced to do so poorly, even quarters where they lose money are viewed positively. It's a low bar to get over.
 
VCT said:
I don't get it. What is the good news for Intel earning release Q&A?
Click to expand...
I just finished listening the Intel conference call. It's a very depressive event.

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1682634413786.png


From Yahoo Finance, Intel's quarterly revenue is falling quickly since Q1 2022 while many its competitors were doing great in 2022. One of the Intel's major problems is that it doesn't have enough and right products to sell. Intel's IFS strategy and 18A/20A may not come large enough to offset the rapid declining revenue.


1682634123639.png
 
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hist78 said:
I just finished listening the Intel conference call. It's a very depressing meeting.

View attachment 1164

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View attachment 1168

From Yahoo Finance, Intel's quarterly revenue is falling quickly since Q1 2022 while many its competitors were doing great in 2022. One of the Intel's major problems is that it doesn't have enough and right products to sell. Intel's IFS strategy and 18A/20A may not come large enough to offset the rapid declining revenue.


View attachment 1163
Click to expand...
Not depressing at all, if you're been following the company. Actually, pretty inspiring, but, you definitely need the context to feel that way, because at face value, it's quite bad.

Intel's problem isn't they don't have the right products, the problem is the same one everyone else is facing, the market collapsed. And it's doubly bad, because Intel's (and AMD's) customers had enormous amounts of inventory. So, what's actually selling to end users is much greater than what Intel (and AMD) are selling, because of the inventory burn.

But, again, it's context. Intel thought they were going to do even worse. So, when you are expecting a class 5 hurricane and get a class 3, you're relieved :p . You're still going to have a bad time of it, but it's still a positive.

Also, not only was revenue up from expectations, guidance was too, and they expect revenue to increase sequentially each quarter this year. That's how you make money in the market, you guess before everyone else does. I have 5K shares in Intel now, might get more if they dip below 30, but that doesn't look as likely now. How far down can they go? I mean, they had a horrific quarter, and barely lost money, while they continue to build out capacity. How high can they go? TSMC is almost 4x their market value, without nearly the TAM reach that Intel has. So, they have to execute, but lately, they have been. Their upside is so much greater than their downside, I don't understand it. But, that's how to make money in the market, see things before other people do. Time will tell if I have, but I'm super confident.
 
ta152h said:
The only market share gains they had were because the previous quarter had a horrible market share loss. That's why Q to Q look OK, because Q2 to Q3 was absolutely horrific. https://wccftech.com/intel-claws-ba...e-from-amd-in-latest-mercury-research-report/

And that was a quarter ago. In it, they barely gained market share in servers, and Intel said in earnings server market share was stable. But, based on their much better than expected revenue in CCG, and Intel leadership strongly implying market share gains (saying people are choosing Intel more and more, or something like that), everything points to Intel gaining market share. Certainly saying AMD probably gained market share is not something that can't be contested. It is possible, I guess, but it's very unlikely.

Edit: Just after posting this, Gelsinger mentioned they were gaining market share.
Click to expand...
Gaining market share isn't necessarily good. You can cut prices to gain market share and you start losing a lot of money. Data center losing money is incredible. The markup on server CPUs is so high that it should very hard to make a loss, yet Intel managed it.
 
lefty said:
Gaining market share isn't necessarily good. You can cut prices to gain market share and you start losing a lot of money. Data center losing money is incredible. The markup on server CPUs is so high that it should very hard to make a loss, yet Intel managed it.
Click to expand...
The list prices on datacenter CPUs are high. What the big cloud companies actually pay is probably a lot lower. More like client CPU pricing, I would guess.
 
lefty said:
Gaining market share isn't necessarily good. You can cut prices to gain market share and you start losing a lot of money. Data center losing money is incredible. The markup on server CPUs is so high that it should very hard to make a loss, yet Intel managed it.
Click to expand...
Agreed, it's not necessarily good, but it overall is. It's a lot better than losing market share. And Intel made a lot of money in CCG, so it turned out well for them.

The development costs in DCAI are quite high, and a lot depends on where you distribute costs. It's not really clear or simple. For example, where do you place your costs for research for fabs? Or building them out? So a lot depends on how you distribute those costs. And where you put the costs for developing the architecture of the processors.
 
ta152h said:
Not depressing at all, if you're been following the company. Actually, pretty inspiring, but, you definitely need the context to feel that way, because at face value, it's quite bad.

Intel's problem isn't they don't have the right products, the problem is the same one everyone else is facing, the market collapsed. And it's doubly bad, because Intel's (and AMD's) customers had enormous amounts of inventory. So, what's actually selling to end users is much greater than what Intel (and AMD) are selling, because of the inventory burn.

But, again, it's context. Intel thought they were going to do even worse. So, when you are expecting a class 5 hurricane and get a class 3, you're relieved :p . You're still going to have a bad time of it, but it's still a positive.

Also, not only was revenue up from expectations, guidance was too, and they expect revenue to increase sequentially each quarter this year. That's how you make money in the market, you guess before everyone else does. I have 5K shares in Intel now, might get more if they dip below 30, but that doesn't look as likely now. How far down can they go? I mean, they had a horrific quarter, and barely lost money, while they continue to build out capacity. How high can they go? TSMC is almost 4x their market value, without nearly the TAM reach that Intel has. So, they have to execute, but lately, they have been. Their upside is so much greater than their downside, I don't understand it. But, that's how to make money in the market, see things before other people do. Time will tell if I have, but I'm super confident.
Click to expand...

"Intel's problem isn't they don't have the right products, the problem is the same one everyone else is facing, the market collapsed. And it's doubly bad, because Intel's (and AMD's) customers had enormous amounts of inventory. So, what's actually selling to end users is much greater than what Intel (and AMD) are selling, because of the inventory burn."

When the overall market demand is down, every company's revenue will be negatively impacted. But when the market demand is good, Intel still can't catch the opportunity to make more revenue as its competitors do. This is an indication that Intel has a serious product offering problem. 2022 was a great year for all Intel's competitors but not for Intel.

Company: 2022 revenue/2021 revenue (US$ billion), 2022 over 2021 growth

Intel: $63.05B/$79.02B, -20.21%
TSMC: $75.88B/$56.82B, 33.5%
Qualcomm: $44.2B/$33.56B, 31.68%
Nvidia: 26.97B/$26.91B, flat
AMD: $23.601B/$16.43B, 44%

For a while Intel kept blaming the global supply chain issues as the main cause for its shrinking revenue. But strangely at the same time those Intel's competitors can achieve better revenue in 2022.
 
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I have a really hard believing in IFS. I know it’s extremely early days but man N3 is turning out to be even bigger than expected. N2 looks to be progressing exceptionally as well. I know what horse I’m betting on….
 
hist78 said:
"Intel's problem isn't they don't have the right products, the problem is the same one everyone else is facing, the market collapsed. And it's doubly bad, because Intel's (and AMD's) customers had enormous amounts of inventory. So, what's actually selling to end users is much greater than what Intel (and AMD) are selling, because of the inventory burn."

When the overall market demand is down, every company's revenue will be negatively impacted. But when the market demand is good, Intel still can't catch the opportunity to make more revenue as its competitors do. This is an indication that Intel has a serious product offering problem. 2022 was a great year for all Intel's competitors but not for Intel.

Company: 2022 revenue/2021 revenue (US$ billion), 2022 over 2021 growth

Intel: $63.05B/$79.02B, -20.21%
TSMC: $75.88B/$56.82B, 33.5%
Qualcomm: $44.2B/$33.56B, 31.68%
Nvidia: 26.97B/$26.91B, flat
AMD: $23.601B/$16.43B, 44%
Click to expand...
You are looking in the past. Not a great way to invest.

So, Intel had two big problems, one was they couldn't make enough product, and then the market collapsed. NVIDIA and AMD did well because of the crypto stuff from last year, at least partially so. But, if we look at AMD's Q4, their revenue collapsed. But, the issue here is, you're not doing an Apple to Apple comparison, forgive the pun (as you'll see). For example, Xilinx was not part of AMD's revenue in 2021, but was in 2022. That's a big part of it. Also, Apple left Intel to make their own chips, and that was felt rather strongly in 2022.

But, rather than use generalities, what products does Intel not have? Last year, yeah. Their server line was hideous, and they were still selling a lot of 14nm stuff as Alder Lake ramped. Right now, Sapphire Rapids is far more competitive, and didn't lose market share. Their mobile and desktops lines are over 80% market share. IFS is ramping up. Their server roadmap looks very strong. I4 is already in production, and I3 will have server parts in Q1 2024 (I think Sierra Forest is a particularly interesting one). And even their lowly GPUs are close to matching AMD in market share, by the last reading 6%.

Their desktop line is the fastest out there. Their mobile is about to get upgraded with Meteor Lake, and is already over 80%. Servers are finally competitive, and will have three upgrades within a year, two of which are quite significant. I'm just not sure where their products aren't good enough. Maybe tell AMD that, while they cry about losing market share.

But, maybe you're right. Let's see what AMD does this quarter. Now they have to compare against themselves with Xilinx, ytoy. It's a lot more difficult of a compare, as opposed to Intel which keeps shedding parts of its business, which distorts the revenue the opposite way.
 
ta152h said:
Agreed, it's not necessarily good, but it overall is. It's a lot better than losing market share. And Intel made a lot of money in CCG, so it turned out well for them.

The development costs in DCAI are quite high, and a lot depends on where you distribute costs. It's not really clear or simple. For example, where do you place your costs for research for fabs? Or building them out? So a lot depends on how you distribute those costs. And where you put the costs for developing the architecture of the processors.
Click to expand...

"And Intel made a lot of money in CCG, so it turned out well for them."

Intel only made a dismal 9% ($0.5B) operating profit from the $5.8 billion CCG Q1 2023 revenue. It's a sharp decline from Q1 2022's 29% ($2.7B) of operating profit.
 
hist78 said:
"And Intel made a lot of money in CCG, so it turned out well for them."

Intel only made a dismal 9% ($0.5B) operating profit from the $5.8 billion CCG Q1 2023 revenue. It's a sharp decline from Q1 2022's 29% ($2.7B) of operating profit.
Click to expand...
True, but everything is relative. Look at the beating AMD took last quarter, and tell me a solid profit like that isn't good. And wait until they report this year.

But, let's be honest, it's all smoke and mirrors. Where does Intel put its costs? How do you distribute costs from things used by multiple divisions? You could easily make it look like CCG lost money this quarter. But, given the circumstances, they did really well, when the market around them absolutely collapsed.
 
You can look at things from different angles and say Intel TAM is higher than TSMC. Well GloFlo TAM is the same as TSMC but there is a big difference in ability to actually seize that.

Personally I think it’s not just a matter of Intel having the wrong products. They have the wrong business model, and having the wrong products is an outcome of having the the wrong business model.
 
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