In extended trading on Thursday, Intel shares rose as much as 7% after the chipmaker announced lower-than-expected earnings guidance for the full fiscal year, but said it will deliver up to $10 billion in cost reductions and efficiency improvements.
Here’s how the business fared:
Earnings per share: 59 cents adjusted, compared to 32 cents expected by analysts, according to Refinitiv.
According to Refinitiv, revenue was $15.34 billion, up from $15.25 billion expected by analysts.
According to a statement, overall revenue fell 15% year on year in the third quarter, which ended on Oct. 1. Revenue fell 22% in the previous quarter. The company’s net income was $1.02 billion, a decrease from $6.82 billion in the previous quarter.
“We expect economic uncertainty to last into 2023,” CEO Pat Gelsinger said during a conference call with analysts. According to Intel’s finance chief, David Zinsner, a global recession is possible.
ALSO READ: Bitcoin is higher to begin the week, but it remains in a sideways pattern
Intel stated that it aims to save $3 billion in sales and operating expenses in 2023, with annual savings reaching $8 billion to $10 billion by the end of 2025. Bloomberg reported earlier this month that Intel was planning to lay off thousands of employees in order to cut costs. The Oregonian reported a few days later that Gelsinger had informed employees that the company would be instituting cost-cutting measures.
“Steps to optimize our headcount will be included in our efforts.” “These are difficult decisions affecting our loyal Intel family,” Gelsinger said during the call on Thursday.
The Client Computing Group, which includes PC chips, generated $8.12 billion in revenue, a 17% decrease but higher than the $7.58 billion consensus among StreetAccount analysts polled. According to Gartner, a technology industry researcher, PC shipments fell nearly 20% in the third quarter, after two years of consumers buying computers to work, study, and play games from home during the pandemic.
Intel reported that PC demand softened in the third quarter, primarily in the consumer and education markets, while device makers reduced their inventories.
The company’s Datacenter and AI segment, which includes server chips, memory, and field-programmable gate arrays, reported $4.21 billion in revenue, a 27% decrease from the previous quarter and less than the StreetAccount consensus of $4.67 billion.
“The data center TAM is holding up better,” Gelsinger said, “although enterprise in China continues to show signs of weakness, as do some, but not all, cloud customers.” According to him, Intel grew its data center market share slower than the rest of the market.
The Network and Edge segment, which includes networking products, generated $2.27 billion in revenue, a 14% increase but less than the $2.40 billion StreetAccount consensus.
During the quarter, Intel announced that MediaTek would rely on Intel Foundry Services for chip manufacturing, and the company broke ground on a production facility in Ohio as part of a $20 billion investment.
In addition, Mobileye, an Intel-backed autonomous-driving technology company, began trading on the Nasdaq on Wednesday. Intel purchased it in 2017 and retains ownership.
The full-year forecast has been reduced by management. The company now expects adjusted earnings per share of $1.95 and revenue of $63 billion to $64 billion, down from $2.30 and revenue of $65 billion to $68 billion three months ago.
This implies a nearly 20% drop in revenue. Refinitiv polled analysts expected adjusted earnings per share of $2.15 and revenue of $65.26 billion.
Despite the after-hours move, Intel shares have fallen nearly 49% this year, while the S&P 500 index is down about 20%.
