Intel trims full-year forecast, battered shares rise
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Loading... - Jack Knight
- 28 Oct 2022
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Chipmaker Intel Corp (INTC.O) on Thursday cut its full-year profit and revenue forecast and warned it would lay off staff, but a stronger-than-expected performance at its personal computers segment helped send shares higher.
Intel shares jumped over 5% in after-hours trade. They have slumped roughly 47% so far this year, underperforming both the S&P 500 index and the Philadelphia SE Semiconductor index.
Chief Executive Pat Gelsinger said the cut to the fourth quarter outlook reflected economic uncertainty expected to last into next year, and that the company was taking time to ramp up sales into data centers, which dropped 27% in the third quarter.
Intel also cut its capital spending forecast for this fiscal year to $25 billion from a previous forecast of $27 billion.
Asked about potential layoffs, Gelsinger told Reuters "people actions" would be part of a cost reduction plan. Intel said it would drive cost reduction of $3 billion in 2023.
"The amount that we can do with respect to people costs is a minority of our overall cost structure. So driving efficiency in the factory network is way more important to our economics than people cost," Gelsinger told Reuters, adding that adjustments to flexible workforces can be "quite immediate".
The adjustments would start in the fourth quarter, he said, but did not specify how many employees would be affected.
Intel had 110,600 employees in late 2020, just before Gelsinger took the helm. That has ballooned to 131,500 by early October this year.
SILVER LINING
Macroeconomic headwinds have muddied the outlook for the PC and data center market, both big markets for Intel.
Intel's "PC Client business was the silver lining as sales grew sequentially giving investors some hope that share loss has moderated materially," said Summit Insights Group analyst Kinngai Chan.
Revenue from the client computing group, which accounts for Intel's PC sales, rose to $8.1 billion in the third quarter from $7.7 billion in the second quarter.
"We believe its data center share loss should also moderate going into next year," said Chan.
On Thursday Amazon reported earnings that missed analyst expectations for revenue at its cloud business, AWS, which rose 28% to $20.5 billion. AWS, and other cloud service providers, are big customers of chip makers, including Intel and key to their revenue growth. Read More…
