Intel Reports Dreary 4Q 2012 Earnings, Worries Industry
Intel [NASDAQ:INTC] today reported their earnings for the fiscal quarter 4Q 2012 as well as the entire fiscal year of 2012 ending December 31st. They reported GAAP revenue of $13.5 billion and a gross margin of 58% resulting in $3.2 billion in operating income and $2.5 billion in net income. This resulted in an EPS of $0.48, beating estimates of $0.46. In addition to that, Intel reported earnings for the year of 2012 with GAAP revenue being $53.3 billion and gross margin being 62.1% and operating income coming in at $14.6 billion resulting in $11 billion in net income for the year. This breaks down to $2.13 EPS for the year of 2012.
Comparing these figures to 3Q 2012 and 2011 as a whole, we can see that Intel's revenue is down 1.2% or $700 million from 2011 compared to 2012. Gross margin also suffered annually, down 0.4%. Intel Operating income suffered which resulted in an operating income of $14.6 billion, down 16% from 2011 levels at $17.5 billion. Overall, net income was also down to $11 billion from $12.9 billion, representing a decrease of 15%. This affected EPS once dilution was taken into account reporting an EPS of $2.13 versus $2.39 in 2011, down 11%. Their quarterly figures were also down significantly more than their annual figures, even though this was already expected. Intel reported revenue of $13.5 billion, down from $13.9 billion in 2011, representing a change downward of 3%. Gross margin, in our eyes, is actually the most worrying figure for Intel as they saw a decrease of gross margin from 64.5% to 58% a change of 6.5%. This obviously affected operating income, which came in at $3.2 billion, versus $4.6 billion in 2011, a change of 31%. Net income was also down significantly to $2.5 billion for the quarter, compared to 4Q 2011, which was $3.4 billion, a difference of 27%. This all reflected upon an EPS of $0.48 versus an EPS of $0.64 for 4Q 2011, down 25% year over year.
Everyone expected Intel's figures to be pretty bad for 2012, 4Q 2012 included. The majority of that had already been built into the price. The real thing hurting Intel's share price right now, is their outlook for 2013. Intel was up 2.58% or $0.57 to $22.68. After announcing their earnings a bit early (12:59 instead of the traditional 1:01 PST), their stock has been hammered and is currently down $1.15 or 5.07% at $21.53.
Intel's outlook for 2013 as a whole is that they expect low single digit revenue growth (below 5%). This is in conjunction for their guidance for 1Q 2013, which they expect to hit $12.7 billion in revenue with a margin of error of $500 million. They also expect gross margin to remain at 58% plus or minus a couple percentage points. Compared to 1Q 2012, which came in at $12.9 billion and a gross margin of 64%. The continued decrease in revenue and gross margin year over year will likely be a popular topic during most conference calls regarding Intel.
Since Intel is considered a bellwether of types, this is likely going to spark a trend of concern for the PC market and semiconductor industry as a whole. The slow down in the European economy is clearly hurting these large chip makers as they cannot rely on the slow recovery in the US to prop them up. We're hopeful that Intel is going to be able to execute their mobile strategies in 2013, otherwise we're not too sure they'll be able to stop this trend.