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

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Intel's CEO suggests that layoffs are coming, as the chip maker expects to cut costs by $3 billion in 2023.

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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