Intel (NASDAQ:INTC) provided optimistic revenue guidance for the upcoming quarter after delivering second-quarter revenue results that exceeded analyst forecasts. However, the semiconductor giant warned that earnings took a hit due to write-downs connected to scaling back plans for new chip manufacturing facilities.
The company also disclosed a workforce reduction plan, aiming to cut staff by 15% and reduce its total employee count to approximately 75,000 by the end of 2025.
Ahead of the market open on Friday, Intel’s stock dropped about 5%.
For the quarter ending June 28, Intel reported an adjusted loss of $0.10 per diluted share on revenues of $12.86 billion. Analysts surveyed by Investing.com had expected earnings per share (EPS) of $0.01 on revenues of $11.95 billion.
This unexpected loss was driven in part by a $0.20 per share negative impact, stemming from $800 million in impairment charges and $200 million in one-time costs recorded during the period.
In efforts to boost capital efficiency and reduce expenses, Intel abandoned plans for new fabrication plants in Germany and Poland. Additionally, the company said it would slow construction on its Ohio chip factory “to ensure spending is aligned with market demand.”
Looking ahead to the third quarter, Intel forecasts adjusted EPS to break even on revenues between $12.6 billion and $13.6 billion. Analysts had predicted EPS of $0.04 on $12.66 billion in revenue.
“We like Lip-Bu’s strategy – but it will take time,” noted analysts at Evercore ISI in a research report.
They added, “Investors view INTC as a show-me story after years of mis execution and share loss. Consequently, we remain on the sidelines but could become more constructive with visibility into execution.”
Meanwhile, analysts at Bank of America took a more cautious stance, commenting that Intel’s “strategic direction, growth strategy and manufacturing direction remain unclear.”
“The company is simultaneously dealing with tough competition (AMD (NASDAQ: AMD), ARM), lack of an AI pipeline, and a capex-intensive manufacturing business that continues to generate heavy losses,” they observed.
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