Intel stock rises on earnings beat and strong revenue guidance

Intel Stock Rises on Earnings Beat and Strong Revenue Guidance | The Enterprise World

On Thursday, Intel stock rises as they announced their third-quarter financial results, surpassing profit and sales expectations, despite a decrease in revenue compared to the same period last year. During an analyst call, Intel’s CEO, Pat Gelsinger, disclosed the company’s plan to reduce costs by approximately $3 billion this year. Additionally, Intel noted a decrease in its workforce, with 120,300 employees currently, down from 131,500 in the previous year.

Following Intel stock rises report on its third-quarter earnings, the company’s shares surged by approximately 7% in after-hours trading, as it exceeded expectations for both profit and sales. This remarkable performance occurred despite a decline in revenue compared to the same period in the previous year.

Here’s how Intel stock rises compared to LSEG (formerly Refinitiv) consensus expectations for the quarter ending on October 1:

Earnings per share: Intel achieved 41 cents, adjusted, while the expected figure was 22 cents.

Revenue: The company reported $14.16 billion in revenue, surpassing the expected $13.53 billion.

Looking ahead to the fourth quarter, Intel anticipates earnings of 23 cents per share, adjusted, with revenue ranging between $14.6 billion and $15.6 billion. This is in contrast to LSEG’s expectations, which predicted 32 cents per share and $14.31 billion in sales. Intel’s net income for the quarter was $297 million, equivalent to 7 cents per share, compared to $1.02 billion and 25 cents per share in the same quarter the previous year. The company’s gross margin for the quarter remained stable year over year at 45.8%.

Despite an 8% decrease in revenue compared to the previous year, marking the seventh consecutive quarter of declining sales, Intel expressed optimism, stating its expectation of revenue growth in the current quarter.

Intel’s CEO, Pat Gelsinger, informed analysts during a call that the company aims to reduce costs by approximately $3 billion this year. Furthermore, Chief Financial Officer David Zinsner attributed Intel’s improved earnings per share to cost control, noting a 15% reduction in operating expenses compared to the previous year. Intel also disclosed a decrease in its workforce, with 120,300 employees, down from 131,500 in the previous year.

The performance of Intel’s business units can be summarized as follows:

Sales in Intel’s Client Computing group, which includes laptop and PC processor shipments, experienced a 3% decrease, amounting to $7.9 billion.

Intel’s Data Center and AI division, responsible for server chips, reported a 10% sales decline, reaching $3.8 billion, citing competitive pressure and a smaller server processor market.

Mobileye, a publicly traded Intel subsidiary specializing in self-driving car components, exhibited strong growth, with a sales increase of 18% to $530 million.

Intel Foundry Services, the company’s emerging chip manufacturing business, although still relatively small with $311 million in revenue, demonstrated substantial growth of nearly 300% compared to the previous year. Intel mentioned a major customer who committed to utilizing some of Intel’s capacity and made a prepayment.

Intel’s network and edge division, which sells networking components, saw a 32% drop in sales, amounting to $1.5 billion. Intel recently announced plans to treat its programmable chip unit as a stand-alone business and aims to list it on public markets in two years, as it is currently part of Intel’s Data Center and AI group and experienced a sequential decline in sales during the quarter.

Intel also expressed confidence that its chips would continue to be valuable for artificial intelligence applications, particularly for running models on local devices rather than relying on the cloud. While acknowledging the shift of some server customers toward AI chips, such as those produced by Nvidia, Intel indicated a belief in a return to normalization in the industry as they enter the fourth quarter.

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