Another difficult quarter for Intel in terms of revenue erosion, but in the profit line it was able to surprise positively, which makes the stock jump 8% in late trading. In the previous quarter, the company surprised investors when it turned into a loss, but in the last quarter it returned to a profit that was even slightly higher than the forecasts. However, this is a net profit of only $1 billion compared to a profit of $6.8 billion in the corresponding quarter in 2021.
The chip giant reported a 20% drop in revenue in the quarter to $15.3 billion. The fall in revenues is mainly due to the operation of the Data Center division, whose revenues fell by 27%, more than the 17% fall in sales of the computing division.
Mobileye, which started trading on Nasdaq yesterday and has already jumped to a value of more than 20 billion dollars, grew by 38%, the fastest rate in the company, but its revenues, 450 million dollars per quarter, are too small to have a material impact on Intel as a whole.
Against the background of the weakness in most activities, Intel again reduces the annual revenue forecast and embarks on an extensive restructuring plan. It now expects revenues of 63-64 billion dollars, a reduction of about 2-4 billion dollars compared to the previous forecast and a fall of 14-16% compared to 2021 revenues. The annual cash flow should be negative.
The cut plan, which should also include widespread layoffs of Intel employees worldwide, is supposed to reduce expenses by $3 billion next year, and by 2025 the savings should reach $8-10 billion. Intel also states that it plans to split and sell other activities, beyond the Mobileye IPO. “To adapt to the new cycle in the market, we are aggressively handling costs,” noted Pat Gelsinger, CEO of Intel, upon the publication of the reports.
In the third quarter, Intel already made a write-off of 664 million dollars in favor of restructuring costs. However, Gelsinger did not specify the exact number of those fired, which according to early estimates could reach more than 1,000.