Intel CEO Pat Gelsinger holds a sample of a wafer during his keynote speech at the Computex conference in Taipei on June 4, 2024.
I-hwa Cheng | AFP | Getty Images
Intel shares slid as much as 17% in extended trading on Thursday after the chipmaker said it would lay off over 15% of its employees as part of a $10 billion cost-reduction plan and reported lighter results than analysts had envisioned.
The company also said that it would not pay its dividend in the fiscal fourth quarter of 2024 and that it will lower full-year capital expenditures by over 20%.
Here’s how the company did, compared to LSEG analyst expectations:
- Earnings per share: 2 cents adjusted vs. 10 cents expected
- Revenue: $12.83 billion vs. $12.94 billion expected
Intel’s revenue declined 1% year over year in the fiscal second quarter, which ended on June 29, according to a statement. The company had a $1.61 billion net loss, or 38 cents per share, compared with net income of $1.48 billion, or 35 cents per share, in the year-ago quarter.
The company’s Client Computing Group that makes PC chips contributed $7.41 billion in revenue, up 9% and right around the $7.42 billion consensus among analysts surveyed by StreetAccount. Intel said results tied to PC chips that can handle artificial intelligence workloads exceeded internal expectations and were on a path for over 40 million unit shipments in 2024.
Intel’s Data Center and AI unit posted $3.05 billion in revenue. The result was down 3% and lower than the $3.14 billion StreetAccount consensus.
For the fiscal third quarter, Intel called for an adjusted net loss of 3 cents per share on $12.5 billion to $13.5 billion in revenue. The LSEG consensus was adjusted net earnings of 31 cents per share and $14.35 billion in revenue.
During the fiscal second quarter, Intel announced that Apollo would invest $11 billion in a joint venture around a chip manufacturing plant in Ireland. The company also introduced Xeon 6 server processors, along with a Gaudi 3 accelerator for AI tasks.
In addition, Intel disclosed in May that the U.S. Commerce Department was revoking export licenses for consumer items to a customer in China, widely believed to be Huawei. Intel said fiscal second-quarter revenue would still be in its previously announced range of $12.5 billion to $13.5 billion, but below the middle of the range. Thursday’s outcome did line up with that update.
The headcount reduction, which will affect about 15,000 employees, will mainly take place this year, Intel CEO Pat Gelsinger said in a memo.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” he wrote. “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low.”
On an adjusted basis, Intel said it expects around $20 billion in cuts this year, $17.5 billion in 2025 and more in 2026.
Excluding the after-hours move, Intel stock has lost 42% of its value so far this year, while the S&P 500 index is up almost 14% in the same period.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
This is breaking news. Please check back for updates.
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