Intel (INTC) is leaving investors in shock and awe at the worst.
The chip giant’s shares plummeted about 25% Friday morning after Thursday’s brutal quarterly results. The company’s ticker page on Yahoo Finance surpassed Amazon (AMZN) and Apple (AAPL) as the most-visited page this morning after both companies reported better-than-expected quarterly results.
Intel faced a more difficult market environment and higher-than-expected costs as it ramped up production of AI chips, resulting in sales, gross margins and profits that fell significantly short of analysts’ expectations.
The company has taken the drastic step of suspending its dividend, which is expected to take effect from the fourth quarter. Intel has paid dividends for 125 consecutive quarters, including $3.1 billion in 2023.
The company also announced a 15% reduction in headcount to maintain liquidity. The company had approximately 125,000 employees as of the end of the second quarter.
The company also reduced its capital expenditures in 2024 by 20% compared to its prior forecast. Capital spending in 2025 is expected to be approximately $5 billion lower than 2024 levels.
“This is arguably the biggest reorganization of Intel since the memory microprocessor decision 40 years ago,” Intel CEO Pat Gelsinger told Yahoo Finance in a live interview. told. Gelsinger said that while he was disappointed with the quarter and outlook, the company is resilient in the long run.
“This is what I signed up for (when I took over as CEO),” Gelsinger added.
The quarter and commentary raised new questions about Intel’s efforts to regain leadership in an industry dominated by outperformers Nvidia (NVDA) and AMD (AMD).
President Joe Biden listens to Intel CEO Pat Gelsinger as Intel Plant Manager Hugh Green looks on during a tour of Intel’s Ocotillo campus in Chandler, Arizona, March 20, 2024 (AP Photo) /Jacqueline Martin, File) ·Related Press
Earlier this year, Intel secured $8.5 billion in grants and an additional $11 billion in loans from the Biden administration to build semiconductor factories in four states. The expansion is part of Intel’s goal to become a leading maker of chips for other companies, rivaling No. 1 Taiwan Semiconductors (TSMC).
Now, Wall Street is once again voicing concerns about Intel’s turnaround plan.
“This is the third straight quarter of negative earnings and a disappointing outlook, reflecting challenging industry fundamentals and company-specific factors,” said Harlan Sarr, an analyst at JPMorgan. We believe that there are,” he said.
Sur reiterated his underweight rating (equivalent to a cell) for Inter.
Net sales: $12.8 billion, -1% YoY (estimated $12.95 billion)
Client computing revenue: $7.4 billion (expected $7.53 billion)
Data center and AI revenue: $3 billion vs. $3.07 billion
Network and edge revenue: $1.3 billion vs. $1.4 billion
Mobileye revenue: $440 million vs. $429.7 million
Intel Foundry revenue: $4.3 million vs. $4.47 billion
Adjusted gross margin: 38.7% vs. estimated 43.6%
Adjusted EPS: $0.02 ($0.13 prior year) vs. $0.10 expected
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