Poor performance, but... Market says "I'll trust you once"
Intel, which has embarked on a large-scale restructuring effort to rebuild the 'semiconductor kingdom,' saw its stock price surge in after-hours trading amid expectations that business trends will improve.
On the 31st (local time), Intel announced that its third-quarter revenue was $13.28 billion, down 6% from the same period last year. This third-quarter revenue is the lowest in 14 years since the same period in 2010 ($11.1 billion). However, it exceeded market expectations of $13 billion. The loss per share was $0.46, which was larger than the expected loss of $0.03 per share.
By business segment, revenue from the Client Group, which sells semiconductors for PCs, was $7.3 billion, down 7% year-over-year. Foundry revenue also decreased by 8%, recording $4.4 billion.
Data center and AI segment revenue increased by 9% to $3.3 billion. Although related revenue grew due to the AI boom, Intel stated that the AI accelerator 'Gaudi,' launched this year, has weaker orders than expected and will not reach this year's revenue target of $500 million. This contrasts with AMD, the industry's second-largest player in the AI chip market dominated by NVIDIA, which recently raised its AI accelerator product revenue target for this year to over $5 billion in its third-quarter results.
Intel's adjusted gross margin for the third quarter was 18.0%, less than half of the 38.7% recorded in the second quarter. David Zinsner, Intel's Chief Financial Officer (CFO), explained in a statement, "Significant restructuring costs had a substantial impact on third-quarter profitability as we took major steps toward cost reduction goals."
Intel has initiated a large-scale restructuring effort to transform its semiconductor business, including plans to cut 16,500 employees this year and split its semiconductor design and manufacturing divisions.
As a result, Intel expressed confidence that its business will gradually improve. Intel forecasted fourth-quarter revenue of $13.3 billion to $14.3 billion and earnings per share of $0.12. This exceeds the average market expectation of $13.66 billion compiled by market research firm LSEG, and the earnings per share also surpass the forecast of $0.08.
Pat Gelsinger, Intel's Chief Executive Officer (CEO), emphasized, "Intel has paid a huge price to catch up with the industry, and now it can focus on its finances."
With rising expectations for Intel's competitiveness recovery, the stock price, which fell 3.50% on the New York Stock Exchange that day, jumped 6.92% in after-hours trading. Intel's stock price has fallen more than 50% this year amid crisis signals such as recording losses in the second quarter and suspending dividend payments.
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