- Intel reported third-quarter earnings on Thursday that beat profit and revenue expectations, although overall sales fell.
Signage outside Intel headquarters in Santa Clara, Calif., on Monday, January 30, 2023.
David Paul Morris | Bloomberg | Getty Images
Intel shares rose about 7% in after-hours trading after the company reported third-quarter earnings on Thursday that beat expectations for profit and revenue, although overall sales fell.
Here’s how Intel performed compared to LSEG (formerly Refinitiv) consensus expectations for the quarter ended October 1:
- Earnings per share: 41 cents, adjusted, versus 22 cents expected
- Revenue: $14.16 billion versus $13.53 billion expected
For the fourth quarter, Intel expects adjusted earnings of 23 cents per share on revenue of $14.6 billion and $15.6 billion, while LSEG expects adjusted earnings of 32 cents per share on revenue of $14.31 billion.
Intel had GAAP net income of $297 million, or 7 cents per share, compared with net income of $1.02 billion, or 25 cents per share, in the year-ago quarter. Intel’s gross margin was 45.8% in the quarter, flat year-over-year.
Revenue fell 8% from $15.33 billion a year ago, the seventh straight quarter of declining sales. However, the company told investors on Thursday that it expects revenue to grow again in the current quarter.
Intel CEO Pat Gelsinger told analysts in a call that the company will cut costs by about $3 billion this year. CFO David Zinsner said in a statement that Intel’s earnings per share this quarter benefited from the company’s cost controls. Intel said it had 120,300 employees, up from 131,500 last year.
This is how Intel’s business areas developed:
- Revenue at Intel’s client computing group, including shipments of laptops and PC processors, fell 3% to $7.9 billion.
- Intel’s data center and AI division, which provides server chips, saw revenue fall 10% to $3.8 billion. Intel said it sees competitive pressures and an overall smaller market for server processors.
- Mobileye, a publicly traded Intel self-driving car parts subsidiary, was a bright spot, increasing revenue 18% to $530 million.
- Intel Foundry Services, the company’s emerging chip-making business, remains a small part of Intel with revenue of $311 million but grew nearly 300% annually. Intel said a major customer had committed to using some of Intel’s capacity and made an upfront payment.
- Intel’s Network and Edge division, which sells networking parts, reported a 32% drop in revenue to $1.5 billion.
Earlier this month, Intel said it would treat its programmable chip unit as a separate company and seek to list it on the public markets in two years. It is currently part of Intel’s data center and AI group.
Intel told investors it believes its chips will be useful for artificial intelligence, particularly for running models on local devices rather than in the cloud. Gelsinger acknowledged that some server customers were shifting their investments from Intel’s central processors to AI chips like Nvidia’s.
“While the industry has seen some shifts in wallet shares between CPUs and accelerators in recent quarters, as well as some inventory depletion in the server market, we are seeing signs of normalization as we enter the fourth quarter,” Gelsinger said.
Intel said it remains on track to catch up with Taiwan Semiconductor Manufacturing Company in chip-making technology by 2025, a plan the company described as “five nodes in four years.”
“While many thought our ambitions were a bit bold when we began our ‘Five Knots in Four Years’ journey about two and a half years ago, we have a growing view of achieving our goal,” Gelsinger said.