Intel Corp. (INTC) concluded 2022 with its worst financial performance since the dot-com crisis more than two decades ago, owing to a double whammy of a decline in both PCs and data centers, and is not expected to reverse anytime soon.

Intel’s yearly earnings fell more than 60% in 2022, and revenue fell more than 20% for the year, drops that the famed Silicon Valley chip company has not seen since 2001, when the conclusion of the dot-com bubble resulted in an 88% drop in profit and a 21% dip in sales.

Profit more than doubled the next year, indicating a quick comeback.

This time, we may not have even reached rock bottom – profit plunged more than 100% unadjusted in the fourth quarter, while revenue fell 32%.

Executives were too anxious about the lingering uncertainty to issue a prognosis beyond the first quarter, but the forecast they did present was even grimmer than their results, predicting a 40% drop in revenue and adjusted losses.

The Market Didn’t Like It

Intel shares fell roughly 10% after hours, which is not an overreaction, nor is it a comparison to the dot-com bust era. In 2001, Intel rival Advanced Micro Devices Inc. (AMD) was making inroads into the server market, just as personal-computer sales were slowing.

Now, history appears to be repeating itself, with Intel facing tough competition from AMD in the lucrative data center area, while experiencing the largest decrease in PC shipments on record.

It’s stunning,” Bernstein Research analyst Stacy Rasgon told CNBC on Thursday, his surprise at such a bad report on display for all to see.

Rasgon was most excited by the company’s profit margin of 39.2% in the third quarter, which he claimed would have been three points lower if Intel hadn’t implemented an accounting modification to extend the depreciation of certain machinery and equipment by three years. He also speculated that Intel’s problems in the data center industry are caused by price or yield problems with new chips.

Data Center Migration is not Going Smoothly

Intel is attempting to migrate its data-center clients to the long-delayed and newly debuted Sapphire Rapids chips, which have a more expensive new memory requirement, therefore it is possible that earlier data-center chips have been discounted.

The data center segment’s operating profitability dropped to $371 million, a quarter of the $2.3 billion in revenues recorded the previous year.

On the company’s call with investors, CEO Pat Gelsinger stated that the Sapphire Rapids ramp has received “excellent feedback” from customers thus far.

This year will be very much about ramping that, and we’ll see improvements in both market share position and ASPs [average selling prices] as we ramp that product,” he said.

But it was the closest Gelsinger came to expressing hope for the coming year.

Executives were hesitant to make any forecasts beyond the first quarter, which he predicted would include “the most significant inventory decline at our customers that we’ve seen in recent history,” which isn’t a good thing because as customers use up all of their chips on hand for manufacturing, they are slower to order new chips.

Is Light at the End of the Tunnel

Gelsinger did try to portray a brighter image six months out, stating that Intel is making headway in decreasing its operating costs and that things should start to improve in the second half of the year.

Overall, we expect a recovery in the second half of the year,” Gelsinger added.

Even that is difficult to accept, given that Intel’s rosy 2022 projection was frequently trimmed in the second half of the year, continuing a trend of failure in that area. The PC industry does not appear to be on the verge of a recovery, and AMD’s new server processors may still have an advantage over Intel’s long-delayed new product, so a turnaround does not appear to be near.

Gelsinger returns to the helm of an already sinking ship, but he has yet to get it back on top of the sea, and is now resorting to accounting techniques to soften the impact.

As he fires employees in order to sustain an outsized payout that Intel can no longer support, investors must wonder if it’s worth sinking with him. It may take them longer to heal than they expect.

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