Major loss: Alarm bells ring at Intel!

succeedwithyou

1 Nov, 2024

Intel Corporation has announced its third-quarter 2024 financial results, and the results show that the company is going through a challenging period.

Intel Corporation announced its third-quarter 2024 financial results, with revenues of $13.3 billion, a 6% decrease from the same quarter last year. The company reported quarterly GAAP (Generally Accepted Accounting Principles) earnings per share of -$3.88 and non-GAAP earnings per share of -$0.46.

Intel’s restructuring and asset write-down decisions had a significant impact on Q3 results. The company booked $15.9 billion in write-downs and $2.8 billion in restructuring expenses, particularly in line with its cost reduction strategies. Intel, which plans to achieve a $10 billion cost reduction target by 2025, stated that it is taking aggressive steps to achieve this goal.

Intel CEO Pat Gelsinger stated that the strategies focused on cost reduction and efficiency increase yielded positive results in the third quarter. Gelsinger emphasized that the efforts to strengthen the x86 product portfolio and the interest in Intel 18A technology in particular showed that the company's cost reduction strategy was on the right track.

Intel CFO David Zinsner said that although the restructuring expenses recorded in the third quarter negatively affected profitability, these steps were necessary to create a stronger financial structure in the long term. Intel generated $4.1 billion in operating cash during the third quarter and paid a dividend of $0.5 billion per share.

Intel's gross profit margin was recorded as 15% and non-GAAP gross profit margin as 18% in the third quarter. The company's research and development (R&D) and general administrative expenses increased by 4% compared to the same period last year, reaching $5.4 billion. The company experienced a significant decrease in operating profit, falling to -68.2%, and its net loss was recorded as $16.6 billion.

In this period, Intel's performance by product groups was down 7% YoY, with Client Computing Group (CCG) revenues of $7.3 billion. However, Data Center and Artificial Intelligence (DCAI) group revenues increased by 9% to $3.3 billion; Network and Edge (NEX) group revenues increased by 4% to $1.5 billion. On the other hand, Intel Foundry revenues decreased by 8% to $4.4 billion.

The company saw a significant increase in restructuring and asset impairment costs in the third quarter. Restructuring expenses were $2.8 billion, of which $528 million were non-cash costs. Additionally, $3.1 billion was allocated for accelerated depreciation and impairment charges on certain of Intel's manufacturing assets.

In particular, a $2.9 billion goodwill impairment was recorded for the Mobileye unit, while a $9.9 billion impairment provision was set aside for deferred tax assets in the US. Intel CFO David Zinsner stated that the restructuring steps were aimed at strengthening the company's long-term profitability and liquidity.

In the third quarter, Intel aims to strengthen collaboration with other major technology companies in the industry by establishing the x86 Ecosystem Advisory Group, a joint initiative with AMD. The group will work to simplify software development processes, ensure compatibility across vendors, and provide standard tools to developers.

Additionally, Intel plans to partner with IBM to offer its next-generation Intel Gaudi 3 AI accelerators on the IBM Cloud, a collaboration aimed at making enterprise AI solutions more cost-effective and driving innovation.

Intel also announced a multi-year agreement with Amazon Web Services (AWS) to develop a next-generation custom Xeon 6 chip that will be customized for AWS with a new AI fabric built on Intel 18A.

Intel also won up to $3 billion in direct funding for the U.S. government’s Secure Enclave program under the CHIPS and Science Act, which aims to strengthen reliable semiconductor manufacturing in the U.S.

An important step in Intel’s future plans was the decision to restructure Intel Foundry Services (IFS) as an independent subsidiary. This new structure aims to provide Intel with more transparent and independent financial management for both its external customers and suppliers.

The company's fourth-quarter 2024 financial expectations show a revenue target of $13.3 billion to $14.3 billion. Loss per share is expected to be $0.24 on a GAAP basis and $0.12 on a non-GAAP basis. Gross margin expectations are announced as 36.5% on a GAAP basis and 39.5% on a non-GAAP basis.

Major loss: Alarm bells ring at Intel!

Popular Posts

Categories

Hashtag

Blog Archive

Popular Posts

ChatGPT couldn’t become the "Google killer": It doesn’t inspire confidence!

The era of autonomous artificial intelligence has begun with Agentforce!

Microsoft launches Bing campaign: distributing 1 million dollars!

The iPhone 17 series hasn't been released yet, but the iPhone 18 Pro camera feature has already leaked!

It may arrive earlier than expected: the release date for the iOS 18.2 update has been announced!

Categories

Hashtag

Blog Archive