Intel's Q2 Earnings Outlook Misses Expectations... After-Hours Shares Down 5%

Announces Restructuring Including Cost Reductions

Intel, the American semiconductor company, saw its after-hours stock price plummet after releasing a second-quarter earnings outlook that fell short of market expectations.

Reuters Yonhap News

On April 24 (local time), Intel announced first-quarter results for this year, reporting revenue of $12.67 billion and earnings per share of $0.13.

Both revenue and earnings per share exceeded Wall Street estimates compiled by market research firm LSEG, which were $12.5 billion and $0.01, respectively.

Revenue from the data center segment rose 8% year-on-year to $4.1 billion. Meanwhile, revenue from the client computing segment, which includes PC chips, fell 8% to $7.6 billion. The foundry division posted revenue of $4.7 billion, up 7% from a year earlier.

Intel projected second-quarter revenue would reach $11.8 billion at the midpoint of its expected range. This is lower than Wall Street's average estimate of $12.82 billion.

Intel explained that the weak second-quarter outlook reflects uncertainties in the macroeconomic environment.

Along with this, Intel also announced restructuring plans, including cost reductions. The company stated it would cut costs by reducing executive positions and improving operational efficiency. As a result, Intel lowered its operating expense target for this year from the original $17.5 billion to $17 billion, and also reduced its capital expenditure target for investments and other purposes from $20 billion to $18 billion. David Zinsner, Intel's Chief Financial Officer (CFO), told CNBC that the operating expense cuts will particularly involve reductions in managerial positions, although the scale of the layoffs has not yet been determined.

This earnings report is the first since CEO Lip-Bu Tan took office last month, succeeding former CEO Pat Gelsinger. CEO Tan stated, "The first quarter was a step in the right direction, but it will take time to regain market share and drive sustainable growth."

On this day, Intel's stock price, which had closed up 4.37% in regular trading on the New York Stock Exchange, fell by more than 5% in after-hours trading following the earnings announcement.