All about the Intel report

Intel (INTC) shares fell despite the chipmaker's 2021 earnings report beating market analysts' forecasts. Intel announced the launch of sales of a new server chip in the current quarter as well as plans to invest in new plants. Analysts point to disappointing earnings forecasts.

Intel (INTC) shares fell despite the chipmaker's 2021 earnings report beating market analysts' forecasts. Intel announced the launch of a new server chip in the current quarter as well as plans to invest in new plants. Analysts point to disappointing earnings forecasts.

Intel report

Intel's Q4 earnings per share fell 28% (from last year's figure) to $1.09, but this was better than analysts' forecasts of a decline to $0.91 earnings per share. Total revenues fell 3% to $19.5bn, but also beat market estimates of $18.31bn.

The company said shipments of its new next-generation server chip, Sapphire Rapids, will begin this quarter, with mass production in the second quarter.

Intel announced last week that it plans to build a chip manufacturing complex in Ohio, in which it will invest at least $20 billion, with a planned launch date of 2025.

Intel's new CEO sees these plans as an opportunity to catch up with competitors, regain lost market share and restore the company's technological edge to better compete with both US and Asian semiconductor giants.

Reasons for the drop in shares

Intel's gross profit fell to 55.4% in the quarter, which analysts saw as a cause for concern, even as market estimates predicted an even bigger decline (to 53.6%).

Most on Wall Street believe Intel's long-term capital spending on new plants and new technology will put pressure on its earnings.

While investors want Intel to return to historical levels of annual gross profit above 60%, the company's CFO David A. Zinsner gave a forecast in the 51% to 53% range. Longer term, Intel CEO Pat Gelsinger said he expects margins to rebound at the end of the five-year period.

Intel forecast

Intel said it expects first-quarter 2022 revenue of $18.3 billion, beating analysts' forecast of $17.62 billion. But its earnings outlook was disappointing: $0.80 per share, compared with Wall Street's average estimate of $0.86.

In addition, 2022 could prove to be a challenging year for Intel due to the ongoing chip supply chain shortages that affect the company both directly and the industry as a whole.