Intel released its third-quarter financial results on Thursday, exceeding expectations in terms of both profit and sales, yet still falling short in comparison to the year-prior period. Chief Executive Officer Pat Gelsinger reported to analysts on the phone that Intel plans to save around $3 billion this year. Intel announced its workforce has decreased from 131,500 in the prior year to 120,300.
Intel shares surged 7% in after-hours trading Thursday following the company's announcement of third-quarter earnings that exceeded LSEG (formerly Refinitiv) expectations on both profit and sales, even though its revenue dropped year-on-year. Compared to analyst forecasts, Intel posted 41 cents in adjusted earnings per share versus the predicted 22 cents, and $14.16 billion in revenue against an estimated $13.53 billion. For the next quarter Intel anticipates 23 cents in adjusted earnings per share on revenue between $14.6 and $15.6 billion, higher than the 32 cents and $14.31 billion foreseen.
Intel recorded a net income of $297 million, or 7 cents per share, as opposed to the year-ago $1.02 billion, or 25 cents per share. Moreover, its gross margin remained flat at 45.8%.
Breaking down the company's performance, sales in Intel's Client Computing division, including laptop and PC processor shipments, were 3% lower at $7.9 billion. The Data Center and AI segment, which sells server chips, had a 10% decrease to $3.8 billion. Mobileye, a publicly traded Intel subsidiary for self-driving car parts, rose 18% to $530 million. Intel's new chip-manufacturing business, Intel Foundry Services, generated $311 million in revenue, a growth of nearly 300% year-on-year. Finally, the network and edge department, selling networking parts, experienced a 32% drop to $1.5 billion in sales.
Intel's CEO Pat Gelsinger told analysts in a call that the company has cut costs by around $3 billion in this year. CFO David Zinsner added that the EPS benefited from expenditure control, with operating costs decreasing 15% year-over-year. The chipmaker also reported that its staff count has declined to 120,300 people from 131,500 last year. Lastly, Intel believes its revenue will increase in the current quarter.
Intel stated that they would treat their programmable chip unit as an individual business and aim to list it on public markets within two years. This part of the Data Center and AI group has seen a dip in sales. Zinsner said that the FPGA market has had strong growth, but is now experiencing a period of inventory burn. In terms of AI, Intel proposed that running models on local devices was a better option than the cloud. Gelsinger noted that server customers had diverted funds to other AI chipmakers such as Nvidia. He added that Intel anticipated the return to normal by the fourth quarter. In response to competitors like AMD and Nvidia using Arm-based chips in PCs, Gelsinger mentioned that chips such as Arm have not caught on in the PC arena. Despite this, Gelsinger stated that Intel still reacted to all competition seriously. Finally, Intel said that they were on track to match the chipmaking technology of Taiwan Semiconductor Manufacturing Co. by 2025, in what they have termed "five nodes in four years."
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