Over the last decade, Intel had steady growth of revenue of roughly 5% per year. But revenue dropped 20% in 2022 lead by poor sales of PC and server chips and higher competition. <br /><br />Every quarter of 2022 brought a decline in revenue versus the same quarter in 2021:<br /><br />Q1: -6.7%<br />Q2: -22.0%<br />Q3: -20.1%<br />Q4: -31.6%<br /><br />This is also reflected in the share price which is down roughly 50%.<br /><br />Intel has responded to this trouble in 3 main ways. <br /><br />1. It’s cut its dividend by 66% to just 13 cents. <br />2. It’s cutting costs. Even the CEO’s salary has been reduced by 25%.<br />3. It’s reinvesting any excess cash into areas that will lead to the creation of long-term value<br /><br />Making the decision to cut dividends is a tough one, but its necessary when considering the slowdown in growth and the significant debt pile. <br /><br />Gross profit margin reduced from 55% to 43% in 2022 and gross profit dropped to $26,8 billion in vs. $43,8 billion in 2021. If we exclude the restructuring expenses that the company had (as they’re not recurring), there are two main types of expenses that the company incurs:<br /><br />- Research and development – that increased to $17,5 billion in 2022 (vs. $15,2 billion in 2021)<br />- And Marketing, general and administrative – that increased to $7 billion in 2022 (vs. 6,5 billion in 2021)<br /><br />This leads to an operating profit of only $2,3 billion (vs. 22,1 billion in 2021). <br /><br />So what we’re looking at is a decrease in demand for Intel’s products combined with high inflation having an impact on the company’s fixed costs. <br /><br />#stocks #investing #overlookedalpha
