What happened
Shares of Intel (INTC -0.38%) sank more than 6% on Friday after the chipmaker issued a dismal financial forecast for the year ahead.
So what
Intel's revenue plummeted 32% year over year to $14 billion in the fourth quarter. A steep decline in the personal computer (PC) market weighed heavily on the semiconductor giant's results. A slowdown in the server market also took a toll.
Intel is slashing expenses to better withstand the downturn. The company is reducing its workforce and curtailing spending as it seeks to reduce costs by $3 billion in 2023 and as much as $10 billion by the end of 2025.
Still, Intel's profitability has declined precipitously over the past year. Its adjusted gross margin decreased by more than 12 percentage points to 43.8%. Intel's adjusted net income, in turn, dropped 92% to $394 million, or $0.10 per share.
Those results were far worse than Wall Street anticipated. Analysts had expected Intel to report per-share earnings of $0.20.
Now what
Intel sees more hard times ahead. Management forecast revenue to fall to between $10.5 billion and $11.5 billion in the first quarter. The company also expects to report an adjusted loss of $0.15 per share.
Intel's concerning outlook provides further evidence that its challenges extend beyond the current weakness in its core markets. The lumbering chip giant has been losing market share to more innovative rivals such as Advanced Micro Devices and Nvidia in recent years. Intel's projected sales shortfall suggests this worrisome trend is likely to persist in 2023.
