Intel CEO Pat Gelsinger stands in front of a cathedral within the German city of Magdeburg on Nov. 12, 2022. During his visit, Gelsinger also visited the planned site of the Intel Gigafactory within the Eulenberg industrial park. /dpa-Zentralbild/dpa (Photo by Peter Gercke/picture alliance via Getty Images)
Peter Gercke | Picture Alliance | Getty Images
Intel reported second-quarter earnings on Thursday, showing a return to profitability after two straight quarters of losses and issuing a stronger-than-expected forecast.
The stock rose 7% in prolonged trading.
Here’s how Intel did versus Refinitiv consensus expectations for the quarter ended July 1:
- Earnings per share: 13 cents, adjusted, versus a lack of 3 cents expected by Refinitiv.
- Revenue: $12.9 billion, versus $12.13 billion expected by Refinitiv.
For the third quarter, Intel expects earnings of 20 cents per share, adjusted, on revenue of $13.4 billion on the midpoint, versus analyst expectations of 16 cents per share on $13.23 billion in sales.
Intel posted net income of $1.5 billion, or 35 cents per share, versus a net lack of $454 million, or a lack of 11 cents per share, within the same quarter last yr.
Revenue fell 15% to $12.9 billion from $15.3 billion a yr ago, marking the sixth consecutive quarter of declining sales.
Intel CEO Pat Gelsinger said on a call with analysts the corporate still sees “persistent weakness” in all segments of its business through year-end, and that server chip sales won’t recuperate until the fourth quarter. He also said that cloud corporations were focusing more on securing graphics processors for artificial intelligence as a substitute of Intel’s central processors.
David Zinsner, Intel’s finance chief, said in a press release that a part of the explanation the report was stronger than expected was due to the progress the corporate has made toward slashing $3 billion in costs this yr. Earlier this yr, Intel slashed its dividend and announced plans to save lots of $10 billion per yr by 2025, including through layoffs.
“Now we have now exited nine lines of business since [Gelsinger] rejoined the corporate, with a combined annual savings of greater than $1.7 billion,” said Zinsner.
Here’s how Intel’s business units performed:
- Revenue in Intel’s Client Computing group, which incorporates the corporate’s laptop and desktop processor shipments, fell 12% to $6.8 billion. The general PC market has been slumping for over a yr.
- Intel’s server chip division, which is reported as Data Center and AI, saw sales decline 15% to $4 billion.
- Intel’s Network and Edge division, which sells networking products for telecommunications, recorded a 38% decline in revenue to $1.4 billion.
- Mobileye, a publicly traded Intel subsidiary specializing in self-driving cars, saw sales slip 1% on an annual basis to $454 million.
- Intel Foundry Services, the business that makes chips for other corporations, reported $232 million in revenue.
Intel’s gross margin was nearly 40% on an adjusted basis, topping the corporate’s previous forecast of 37.5%. Investors wish to see gross margins expand at the same time as the corporate invests heavily in manufacturing capability.
In the primary quarter, the corporate posted its largest loss ever because the PC and server markets slumped and demand declined for its central processors. Intel’s results on Thursday beat the forecast that management gave for the second quarter on the time.
Intel management has said the turnaround will take time and that the corporate is aiming to match TSMC‘s chip-manufacturing prowess by 2026, which might enable it to bid to make probably the most advanced mobile processors for other corporations, a technique the corporate calls “five nodes in 4 years.”
Intel said on Thursday that it remained on the right track to hit those goals.
