Question Intel Q4 Results

[jpiniero]

https://d1io3yog0oux5.cloudfront.net/_8020e84ca449012613cb7a51a8b3788c/intel/db/887/8894/earnings_release/Q4+22_EarningsRelease.pdf

https://d1io3yog0oux5.cloudfront.net/_f2b8ef2fed169a734498f0ef90617704/intel/db/887/8894/earnings_presentation/Q4%272022+Earnings+Deck_Final.pdf

Yuck. Revenue down 32% and again they lost money.

CCG revenue down 36%, DCG down 33%... that in Q4 compared to previous year.

Q1 Guidance is even worse... revenue down 40% YoY.

 

[IntelUser2000]

He could give up 100% of his salary and he would be giving up a minority of his compensation. If he has held onto most of them it is quite possible has enough shares the dividends from them are larger than his official salary.

His compensation is high, but not that high. Most of his $170 million won't be awarded until he meets his targets. And some of the extra bonuses are tied into him being lured away from VMWare.

There was a vote by shareholders to not pay him the extra, cause obviously the stock price tanked.

Someone said the real pay is $25-30 million. Actually foregoing most of that is going to be a morale thing more than anything else.

I also agree that he's betting on 2023 being better. Based on the product cadence, I can't see 2023 being it. 2024 starts looking different. But it's all overshadowed by the global economy. If they keep pushing for war and something like nuclear war happens, then sales are going to go to $0 for everyone, and CPUs would be the last thing anyone cares about.

 

[Mopetar]

I do not think that Intel desktop CPUs are doomed after 3D Ryzens come, even if they lose by few percent, they may be better in performance per price, and the Raptor refresh may retake the crown again.

The 7800X3D which won't launch for a few months will make the 13900K a bad value by comparison. It's not as much of an issue against a 7950X3D for sure, but if you're going for the value argument then you pretty much want a 13600/7700 instead.

Intel has already launched the 13900KS so I expect nothing else from them and given how little the KS gained over the K even a refresh isn't going to change the value equation by much.

Honestly I have no idea why they bother with so many SKUs of server CPUs, when they are so bad compared to AMD products. Do they do it as an image thing?

The server market has a lot of different needs, so Intel wants different parts to fit that. Having a lot of bins for their big monolithic CPUs also let them use all but the most defective silicon as well.

Intel also had some areas that AMD didn't cover such as 8P systems. Zen has always topped out at dual socket parts. The extra core count meant that you could get similar core count as a 4P Intel system at various points, but that's a market niche itself that AMD may have decided not to focus on or to address by just having higher core counts per CPU.

 

[Exist50]

The server market has a lot of different needs, so Intel wants different parts to fit that. Having a lot of bins for their big monolithic CPUs also let them use all but the most defective silicon as well.

Intel also had some areas that AMD didn't cover such as 8P systems. Zen has always topped out at dual socket parts. The extra core count meant that you could get similar core count as a 4P Intel system at various points, but that's a market niche itself that AMD may have decided not to focus on or to address by just having higher core counts per CPU.

Beyond that, if you look at the actual availability and shipment breakdown, only a fraction of the total SKU list are really high volume. Those are what you see the CSPs using, or in a typical Dell/HP/Lenovo server. The rest are usually because some customer or market wants a slight tweak to better cater to their needs. But each SKU has a supply chain cost. When Intel was 90%+ of the market, and AMD just reentering, it made sense for Intel to have a ton of SKUs, and AMD comparatively few. As that ratio changes, I think we'll see the SKU gap converge as well.

Also, Intel seems to have a lot more options on the lower part of the stack than AMD. With Sienna, I bet AMD will start filling that out a bit more.

 

[Mopetar]

I don't think the supply chain cost of each extra CPU variant that Intel has amounts to much. If they consolidated bins to have fewer parts they still have just as much inventory to manage.

 

[DAPUNISHER]

I also agree that he's betting on 2023 being better. Based on the product cadence, I can't see 2023 being it. 2024 starts looking different. But it's all overshadowed by the global economy. If they keep pushing for war and something like nuclear war happens, then sales are going to go to $0 for everyone, and CPUs would be the last thing anyone cares about.

Your favorite hardware vendor falls on some hard times, and your mind goes to dark places.

Game over man! Game over!

It's going to be okay. Remember, if you hold their stock, it is only a realized loss if you sell it.

 

[Ajay]

Your favorite hardware vendor falls on some hard times, and your mind goes to dark places.

It's going to be okay. Remember, if you hold their stock, it is only a realized loss if you sell it.

I supposed some AI will eventually nuke us all anyway. Thanks Intel

 

[Hitman928]

Intel announced that they are taking on an additional $11B in long term debt this year.

 

[Kocicak]

Intel announced that they are taking on an additional $11B in long term debt this year.

Really? I am not sure, how much did they pay out on dividends last year?

 

[Hitman928]

Really? I am not sure, how much did they pay out on dividends last year?

They paid out ~$6B. This year it is expected to be slightly more as new shares have been issued and Intel has not announced any buy backs.

 

[Kocicak]

I do not get this.

EDIT: Who down-voted the previous message, is there any error in it? Would not it be better to point out the error instead of down-voting it?

 

[itsmydamnation]

I do not get this.

keep share price high for today , hope to execute tomorrow otherwise compounding problems.

 

[desrever]

I do not get this.

Their management get compensated in stocks which pay dividend. Pat probably makes way more from his dividend than from his base compensation, same with most of the upper management. They aren't willing to sacrifice their own gains to save the company in the long run.

 

[Kocicak]

They aren't willing to sacrifice their own gains to save the company in the long run.

This cannot be so bad, can it? Pat is a good religious man. He surely would not put his own gain above the long term prosperity of such an important company?

 

[BorisTheBlade82]

EDIT: Who down-voted the previous message, is there any error in it? Would not it be better to point out the error instead of down-voting it?

Fixed.

 

[Saylick]

Intel announced that they are taking on an additional $11B in long term debt this year.

Wow. Just wow.

They are literally reducing the valuation of the firm to appease shareholders who clearly prefer to get paid now. I exaggerate, of course, but they might as well be liquidating assets and writing checks to shareholders at that point.

 

[Exist50]

Wow. Just wow.

They are literally reducing the valuation of the firm to appease shareholders who clearly prefer to get paid now. I exaggerate, of course, but they might as well be liquidating assets and writing checks to shareholders at that point.

At Intel's current market cap, they're probably darn close to the liquidation value of their physical assets. Which is quite telling.

 

[maddie]

Wow. Just wow.

They are literally reducing the valuation of the firm to appease shareholders who clearly prefer to get paid now. I exaggerate, of course, but they might as well be liquidating assets and writing checks to shareholders at that point.

The rats are scavenging before leaving. Really looks like that to me, unless there is some super duper ultra secret product coming soon. Quite ominous.

 

[Markfw]

At Intel's current market cap, they're probably darn close to the liquidation value of their physical assets. Which is quite telling.

For someone who is not a financial analyst, can you translate for a plain user ? And the reply below you. Does this mean that for the first time, the majority here is saying that Intel IS in enough trouble to do a chapter 13 or whatever ? bankruptcy ?

I am asking, not saying anything, since all I know is that they have no compelling products at the moment IMO.

 

[Hitman928]

keep share price high for today , hope to execute tomorrow otherwise compounding problems.

You are correct. Intel expects to return to profitability in 2024 and to again see high, positive free cash flow in 2025 and onward. If this actually happens, then taking on this additional debt won't mean too much in the long run. However, any additional stumbles along the way, then this is another ~$700M a year in debt payments to add to the reality of cut down revenues with no possibility of helpful debt restructure in the foreseeable future.

 

[Saylick]

You are correct. Intel expects to return to profitability in 2024 and to again see high, positive free cash flow in 2025 and onward. If this actually happens, then taking on this additional debt won't mean too much in the long run. However, any additional stumbles along the way, then this is another ~$700M a year in debt payments to add to the reality of cut down revenues with no possibility of helpful debt restructure in the foreseeable future.

Alternatively, they can cut the dividend and not have to take out as big of a loan. If it's a short-term speed bump like they say it is, just temporarily suspend the dividend, announce that the dividend money will instead be diverted to get Intel out of the hole, and then slowly bring back on the dividend as the health of the company improves. Instead, the Board is too chicken and fearful of the shareholders that they would much rather take on debt which immediately gets paid out to investors. That debt money literally flows to the shareholder's pocket, while it remains as a redline on Intel's books.

 

[Exist50]

For someone who is not a financial analyst, can you translate for a plain user ?

Basically, here's the question. If you shut down Intel today - fired all the employees, closed the fabs, etc., and sold off all the hard, physical assets (buildings, tools, land, inventory, etc.) on the open market, how much money would you get? And how does that compare to Intel's current valuation as a company?

The difference between those numbers is how much the market values all of the future stuff Intel is working on. If it's $0, then that's the market saying that the sum total of Intel's in-progress engineering efforts are worth literally nothing. How does Intel's market cap compare to their liquidation value? No idea, but that's the question.

Importantly, this is not the same as saying they're bankrupt. Even with their recent credit downgrades, the credit agencies still seem mostly confident that Intel can pay its debts, and thus avoid bankruptcy.

 

[positivedoppler]

It's very likely that AMD and Intel heads towards a 50/50 market split averaged out over server, pc, laptop. and fpga. Difference is, AMD does not have to pay for the outrageously we expensive cost of developing the latest node.

 

[BorisTheBlade82]

Basically, here's the question. If you shut down Intel today - fired all the employees, closed the fabs, etc., and sold off all the hard, physical assets (buildings, tools, land, inventory, etc.) on the open market, how much money would you get? And how does that compare to Intel's current valuation as a company?

The difference between those numbers is how much the market values all of the future stuff Intel is working on. If it's $0, then that's the market saying that the sum total of Intel's in-progress engineering efforts are worth literally nothing. How does Intel's market cap compare to their liquidation value? No idea, but that's the question.

Importantly, this is not the same as saying they're bankrupt. Even with their recent credit downgrades, the credit agencies still seem mostly confident that Intel can pay its debts, and thus avoid bankruptcy.

Wanted to answer as well, but I couldn't have described it better.
Just one point to add: Intel needs to keep their stock from plummeting. Because otherwise they might become a real bargain for a hostile takeover from the likes of Apple, Alphabet, Amazon or someone else with deep pockets.

 

[Saylick]

Wanted to answer as well, but I couldn't have described it better.
Just one point to add: Intel needs to keep their stock from plummeting. Because otherwise they might become a real bargain for a hostile takeover from the likes of Apple, Alphabet, Amazon or someone else with deep pockets.

Ehhh, while Apple or some other whale might have the financial power to do so, who's to say the FTC won't step in and block it? I don't think they'll get bought out for that reason.

 

[Hitman928]

Basically, here's the question. If you shut down Intel today - fired all the employees, closed the fabs, etc., and sold off all the hard, physical assets (buildings, tools, land, inventory, etc.) on the open market, how much money would you get? And how does that compare to Intel's current valuation as a company?

The difference between those numbers is how much the market values all of the future stuff Intel is working on. If it's $0, then that's the market saying that the sum total of Intel's in-progress engineering efforts are worth literally nothing. How does Intel's market cap compare to their liquidation value? No idea, but that's the question.

Importantly, this is not the same as saying they're bankrupt. Even with their recent credit downgrades, the credit agencies still seem mostly confident that Intel can pay its debts, and thus avoid bankruptcy.

As of December, Intel's price to book value ratio was only 1.05. So yeah, the market doesn't have much confidence in Intel's future at the moment.