Amid a devastating year of restructuring and layoffs, Intel managed to pull off a 9% increase in data center and AI revenues in the third quarter. However, foundry revenues dropped by 8% and client computing dropped by 7% year over year.
Overall, the company saw revenues drop to $13.3 billion, a reduction of 6% from a year earlier. Earnings loss per share were minus $3.88. Analysts had expected a revenue decline of nearly 8% to $13.04 billion and earnings down by minus $0.03.
Intel shares rose 12% immediately after close to $24.30. “The Street is definitely reacting to that $260 million beat on revenue,” said Patrick Moorhead, founder of Moor Insights & Strategy. “The biggest takeaway is solid operational performance with a solid guide.” He spoke to Yahoo! Finance online.
CEO Pat Gelsinger reported “solid progress” in the $10 billion cost restructuring plan it announced in Q2, which included simplifying Intel’s portfolio and improving organizational efficiency with 15,000 layoffs. Recently, the company headcount had reached 115,000. He also reported “strong interest” from foundry customers for the 18A process node.
Layoffs were largely completed in September and will be finished by year's end, he said. "These were very difficult decisions to right size and I want to recognize the hard work of our employees," Gelsinger said on a call with analysts. "Every quarter is a new opportunity to up our game....We have a lot more ahead and are acting with urgency. We need to fight for every inch as we build a leaner and more profitable Intel."
CFO David Zinsner reported Intel recognized $2.8 billion in restructuring charges in the quarter, with $2.2 billion to be settled in cash in the future. Charges for the quarter included $3.1 billion related to the cost of sales with a substantial majority related to the Intel 7 process node. Another $2.9 billion is related to impairment of goodwill for some units, with Mobileye the primary unit. And $9.9 billion was related to a valuation allowance against US deferred tax assets. All these charges led to a GAAP loss per share of minus $3.88. The charged were not included in previous guidance for 3Q.
Foundry revenues were down 8% to $4.4 billion in the quarter, but Intel in a statement said its 18A process node is “healthy and continues to progress well, and the company’s two lead products, Panther Lake for client and Clearwater Forest for servers have met early Intel 18A milestones ahead of next year’s launches.”
The business outlook for the 4Q projects revenues of $13.3 billion to $14.3 billion with an earnings loss of -$0.24.
Zinsner and Gelsinger did not offer an outlook for 2025 revenues. Indicating undercertainty in geopolitics, Gelsinger added, "there's quite a bit of uncertainty in the market."