Intel Escapes Deficit Quagmire... Stock Surges Over 7%

Q2 Net Profit Turns Positive
Sales Exceed Market Expectations

Intel, a U.S. semiconductor company struggling with continuous sales declines, has successfully turned a profit after being stuck in the red. The market cheered as the stock price rose more than 7% following unexpectedly strong earnings.

On the 27th (local time), Intel announced in its earnings report that its net profit for the second quarter of this year was $1.5 billion (approximately 1.92 trillion KRW), marking a turnaround from a net loss of $454 million in the same period last year.

This profit turnaround came after three consecutive quarters of losses, with net losses recorded in Q4 last year (-$700 million) and Q1 this year (-$2.8 billion). The loss in Q1 this year was the worst quarterly performance ever. It was more than four times the previous largest loss of $687 million in Q4 2017.

During the same period, revenue was $12.9 billion (approximately 16.54 trillion KRW), down 15% from $15.3 billion in the same period last year, continuing a six-quarter streak of decline since Q1 last year. However, it exceeded the market expectation of $12.13 billion.

The Wall Street Journal (WSJ) analyzed that Intel’s improved performance appears to be due to the rebound in the personal computer (PC) market, which has restarted demand. According to market research firm IDC, PC shipments in Q2 decreased by 13.4% year-over-year, a smaller decline compared to the 29% drop in the previous quarter.

Intel CEO Pat Gelsinger stated, "Inventory is decreasing in line with the increase in PC demand in Q2," and evaluated that "the semiconductor division for PCs is becoming healthy again."

Intel’s revenue from the PC semiconductor division in Q2 decreased by 12% year-over-year but increased by about 17% compared to the previous quarter.

Having succeeded in turning a profit, Intel also raised its earnings outlook for the second half of the year. Intel set its Q3 revenue target at $12.9 billion to $13.9 billion. The midpoint of $13.4 billion exceeds the market forecast of $13.23 billion.

The market cheered the recovery in profitability and the stronger-than-expected earnings guidance. Intel’s stock price closed up 0.55% in regular trading on the day and surged over 7% in after-hours trading following the earnings announcement.