On Thursday, Intel revealed second-quarter earnings with a return to positive gains after two consecutive quarters of losses.In addition, the company's outlook was greater than anticipated, causing the shares to soar in after-hours trading.
On Thursday, Intel reported their second-quarter earning results, revealing they had returned to profitability after two consecutive quarters of losses and that their forecast was better than initially anticipated. This positive news provoked a 7% rise in their stock during extended trading. The results were higher than Refinitiv's expectations, with earnings per share at 13 cents (compared to the expected loss of 3 cents) and revenue at $12.9 billion (versus $12.13 billion expected). For the third quarter, Intel expects earnings of 20 cents per share and revenue of $13.4 billion. The company's income report for the second quarter noted net income of $1.5 billion (or 35 cents per share), versus a net loss of $454 million (or 11 cents per share) in the same quarter last year. As for yearly stats, revenue decreased by 15% to $12.9 billion from $15.3 billion. CEO Pat Gelsinger stated that they are still seeing "persistent weakness" across all sectors of their business until year-end and that server chip sales will likely not recover until the fourth quarter. He also reported that cloud companies have shifted their focus to securing graphics processors for AI over Intel's central processors. Intel's CFO, David Zinsner, mentioned some of these results had been enabled by the progress they have made towards cutting $3 billion in costs this year. This initiative has included reducing their dividend and making plans to save $10 billion annually by 2025, including layoffs. He noted that Intel had now left nine line of businesses, which has saved around $1.7 billion in total.
Revenue in the Client Computing group of Intel, encompassing laptop and desktop processor shipments, declined by 12% and it reached $6.8 billion. As the overall PC market has been weak for more than a year, the sales of Intel's server chip division, grouped under Data Center and AI, went down by 15% and amounted to $4 billion.Intel's Network and Edge division, which provides networking products for telecommunications, experienced a 38% dip in revenue and landed at $1.4 billion. The output of Mobileye, Intel's subsidiary dealing with self-driving cars, was $454 million, displaying a 1% annual drop. Finally, Intel Foundry Services, manufacturing chips for other companies, generated $232 million in revenue. The company reported its adjusted gross margin was nearly 40%, topping the previous forecast of 37.5%. Such results demonstrate that their efforts are beginning to pay off. With investors eager to see gross margins increase, Intel continued to invest heavily in its manufacturing capabilities.Last quarter, Intel posted their biggest loss ever as PC and server markets weakened and demand for their processors diminished. On Thursday, Intel's outcomes surpassed the prognosis given by management for the second quarter. Intel administrators have stated that their recovery will take some time, and that they intend to keep up with TSMC's chip-creating skillfulness by 2026. This move would enable them to bid to produce the most sophisticated mobile processors for other firms, which they call "five nodes in four years". Intel declared that they are still on the path to reach these objectives on Thursday.
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