Intel stock price rise was about 7% in after-hours trading after the company reported third-quarter earnings on Thursday that beat expectations for profit and sales, even as its revenue declined from the year-earlier period. The reason for the chipmaker to notch unexpectedly big gains is its continued rebound from two quarters of losses.
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“We delivered a standout third quarter,” Intel CEO Pat Gelsinger said in the statement.
Intel stock price rose in late trading after predicting a return to sales growth in the fourth quarter, fueled by an improving personal computer market and a more competitive product line.
Intel Q4 forecast
Intel stock forecast along with the Q4 revenue and margins was above Wall Street estimates on Thursday. The Intel stock forecast showed optimism about a healthy rebound in personal computer sales, improvement in its data center business, and a growing lineup of customers seeking its manufacturing services.
CFO, David Zinsner said Intel expects a fourth-quarter slowdown in sales of its programmable chips, as well as several quarters of slow sales next year. Intel said earlier this month it plans to spin that business off in an initial public offering.
Sales at its data center business, which also houses its AI chip division, dropped 10% to $3.8 billion. But Gelsinger said the company has seen interest surge for its “Gaudi” AI chips, with demand now outstripping supply.
While Intel remains under heavy competitive pressure from Nvidia in the data center chip market, the easing PC slump and stabilization of its server chip business helped raise gross margins faster than analysts had expected. This lead to Intel stock rise on late trading, though the company’s executives warned that it could take well into next year for margins to rise significantly.
Intel’s cost cutting
Intel CEO Pat Gelsinger told analysts on a call the company would cut costs by about $3 billion this year. Chief Financial Officer David Zinsner said that Intel’s earnings per share benefited from the company controlling expenses, with operating expenses declining 15% from a year ago. Intel said it has 120,300 employees, down from 131,500 last year.
Intel stock rise as market grows
The Santa Clara, California-based company, Intel stock rise was seen about 8% after the closing bell. The company also has secured three customers for its chip contract manufacturing business, as per Chief Executive Pat Gelsinger. He also expects to close a deal for a fourth customer before year’s end.
The decline in global PC shipments narrowed to 7% in the Q3 after double-digit percentage dips earlier this year, and the market is set to return to growth during the highly anticipated holiday season, analysts at research firm Canalys said.
Intel’s forecast adjusted current-quarter revenue of about $14.6 billion to $15.6 billion, compared with an estimate of $14.35 billion according to LSEG data.
Intel stock price adjusted profit for Q4 is expected to be about 44cents, above analysts’ estimate of 32 cents.
Intel’s turnaround plans
Heavy manufacturing investments to support Gelsinger’s turnaround plans have taken a toll on the company’s gross margin, which shrank to the mid-30s in the second quarter from over 60% in 2020 affecting Intel’s stock price. The adjusted gross margin came to 45.8% in the third quarter, compared with estimates of 42.7% according to LSEG data.
Intel’s increasing business
Gelsinger said in an interview that Intel has a fourth foundry customer for its advanced manufacturing process called “18A,” which it plans start producing in late 2024 and which it will offer to customers through its Intel Foundry Services business.
“We now have three committed customers on 18A, and we expect that we will successfully conclude at least one more this quarter,” Gelsinger said.
On a conference call with analysts, Gelsinger also said Intel is in talks with six new customers for its advanced packaging business.
“These wins are coups against TSMC,” said Glenn O’Donnell, research director at Forrester, referring to the world’s largest chipmaker.
Adjusted profits increased
Intel reported adjusted profits of 41 cents per share in the third quarter, compared to an estimate of 22 cents according to LSEG data. Revenue fell 8% to $14.2 billion.
Revenue in the client segment, which houses Intel’s PC business, fell 3% to $7.9 billion.
Intel’s revenue growth
Here’s how Intel did versus LSEG consensus expectations for the quarter ended Oct 1.
- Earnings per Intel stock price: 41 cents, adjusted, versus 22 cents, expected.
- Revenue: $14.16 billion versus $13.53 billion expected.
- Fourth quarter, Expected earnings per Intel stock price is of 23 cents, adjusted, on revenue of $14.6 billion and $15.6 billion, versus LSEG expectations of 32 cents per Intel stock price on $14.31 billion in sales.
Intel posted net income of $297 million, or Intel stock rise of 7% per share, versus net income of $1.02 billion, or 25 cents per share in the same quarter last year. Intel’s gross margin for the quarter was 45.8 cents, which was flat year over year.
Intel revenue fell 8% from $15.33 billion a year ago, the seventh consecutive quarter of declining sales. However, the chipmaker told investors on Thursday that it expects revenue to grow again in the current quarter.
