Wonderful to be at #Computex2024 this week, where we highlighted how @Intel is innovating across the full spectrum of the AI market opportunity.
— Pat Gelsinger (@PGelsinger) June 4, 2024
Our latest #Xeon, #Gaudi, and #CoreUltra platforms, combined with the power of our hardware and software ecosystem, are delivering the… pic.twitter.com/7xujuQQOwQ
Intel, a big company that makes computer chips, had a good quarter. They earned more money than people thought they would. They also said that they expect to do even better in the next few months. Because of this good news, the price of Intel’s shares went up by 7%.
“Here’s how the company performed compared to LSEG expectations:”
- Earnings per Share: Adjusted earnings were 17 cents, compared to an expected loss of 2 cents.
- Revenue: Total revenue was $13.28 billion, higher than the expected $13.02 billion.
Intel’s Financial Performance for Fiscal Q3
Intel’s revenue dropped 6% year-over-year in the third quarter, ending on September 28. The company reported a net loss of $16.99 billion, or $3.88 per share, compared to a profit of $310 million, or 7 cents per share, in the same quarter last year.
Cost-Cutting Measures
As part of a plan to cut costs, Intel reported $2.8 billion in restructuring charges this quarter. The company also had $15.9 billion in asset impairment charges, which included accelerated depreciation of Intel 7 process node assets and goodwill impairment in its Mobileye unit.
Major Restructuring
CEO Pat Gelsinger shared that Intel is undergoing one of its biggest restructuring plans since it was founded in 1968. On October 28, Intel’s board approved more cost-cutting steps, including plans to reduce its workforce by 16,500 employees and cut back on its real estate. These job cuts, initially announced in August, are expected to be complete by Q4 2025.
Challenges and Strategy
Intel has been struggling with a drop in market share in its core businesses and challenges in the AI market. In Q3, Intel revealed plans to make its foundry business an independent subsidiary to attract external funding.
Investor Defense and Qualcomm Interest
CNBC reported that Intel hired advisors to defend itself from activist investors. In late September, there were reports that Qualcomm approached Intel about a potential takeover.
Client Computing Group
Intel’s Client Computing Group, which sells PC chips, earned $7.33 billion in revenue in Q3, down about 7% from last year and slightly below the $7.39 billion analysts expected. Customers reduced their inventories this quarter after facing supply shortages.
Data Center and AI Segment
Revenue from Intel’s Data Center and AI segment increased 9% to $3.35 billion, beating the analyst estimate of $3.17 billion.
Outlook for Q4
Intel expects adjusted earnings of 12 cents per share and revenue between $13.3 billion and $14.3 billion for Q4. Analysts had predicted adjusted earnings of 8 cents per share and revenue of $13.66 billion.
Product Announcements
During Q3, Intel launched its Xeon 6 server processors and Gaudi AI accelerators. However, sales of Gaudi have been slower than expected, and Intel will not meet its $500 million revenue target for this product in 2024.
Stock Performance
By Thursday’s market close, Intel’s stock was down about 57% in 2024, while the S&P 500 had risen by 20%.
Watch the Video: Intel’s Q3 Earnings Report and Restructuring Plans
Q & A Highlights
Q:”Pat, can you explain the progress on the 18A transition and when we might see proof that it’s working well?”
A:Patrick Gelsinger, CEO: “We made good progress with three new customers, including Amazon. While we won’t see much financial benefit from these deals next year because production is starting slowly, we’ll share regular updates and the total value of these deals. We expect these partnerships to have a big financial impact in 2026 when production increases.”