Intel stock rises on earnings beat, plans for layoffs, billions in cost cuts planned

Intel Corp. shares rose after hours Thursday after the chip maker topped Wall Street earnings estimates for the quarter and PC-chip sales came in slightly higher than expected, while the company trimmed its full-year outlook once more and said it expects to cut costs by $3 billion in 2023, including layoffs.

Intel booked $664 million in restructuring charges in the third quarter, and expects $3 billion in cost reductions in 2023, “growing to $8 billion to $10 billion in annualized cost reductions and efficiency gains by the end of 2025,” the company said. Intel reported third-quarter net income of $1.01 billion, or 25 cents a share, compared with $6.82 billion, or $1.67 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 59 cents a share, compared with $1.45 a share from a year ago.

Breaking down divisions: Client-computing sales fell 17% to $8.1 billion from a year ago, while data-center and AI group sales dropped 27% to $4.2 billion, “network and edge” sales rose 14% to $2.3 billion, and Mobileye sales rose 38% to $450 million. On Wednesday, Mobileye Global Inc. MBLY, -5.42% shares started trading on the Nasdaq following the self-driving tech company’s initial public offering.

For the fourth quarter, Intel forecast earnings of about 20 cents a share on revenue of about $14 billion to $15 billion and adjusted gross margins of about 45%. Analysts surveyed by FactSet had estimated adjusted fourth-quarter earnings of 70 cents a share on revenue of $16.32 billion. Last quarter, Intel cut its outlook for the year to about $2.30 a share adjusted earnings on revenue of about $65 billion to $68 billion with gross margins of 49%. As recently as the end of April, Zinsner had said he was comfortable with a gross margin forecast between 51% and 53%; last year Gelsinger had promised margins would remain “comfortably above 50%.”

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