Intel (INTC.US) shares fell after its quarterly results, primarily due to the announcement of mass layoffs (15% of total employment, approximately 15,000–24,000 people), the cancellation of billions of dollars in investments in new factories (Germany, Poland, Costa Rica, delays in Ohio), and harsh criticism of the previous CEO's costly strategy. Investors interpreted these actions as a signal of a shift from ambitious technological development to drastic cost savings and defensive restructuring, at the expense of future growth. Furthermore, low profitability disappointed – the gross margin fell below expectations, and the company recorded a higher-than-expected net loss. The market fears that Intel is abandoning its grand ambitions in favor of fundamental survival in the fight against competitors such as Nvidia, AMD, and TSMC.
Results and forecasts (compared to consensus):
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Revenue: $12.86 billion (expected $11.88 billion) – better than expected.
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Net loss: $2.9 billion, loss per share 10c (forecast: profit 1c) – much worse than expected.
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Gross margin: 29.7% (forecast: 36.6%) – significantly below consensus.
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Segment revenue: Client ($7.87 billion vs. $7.29 billion forecast), Data Center & AI ($3.94 billion vs. $3.73 billion forecast), Foundry ($4.42 billion vs. $4.39 billion forecast).
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Q3 estimates: revenue $12.6-13.6 billion (forecast: $12.64 billion), EPS 0c (forecast: 4c).
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FY Capex: $18 billion (forecast: $18.13 billion).
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Restructuring costs: $1.9 billion.
The reason for the share price decline is a combination of disappointing earnings, very low margins, the threat of losing its technological position, and apparent significant cost cuts suggesting concerns about the company's future.
The company's shares are losing nearly 8% before the market open, falling below their 50- and 100-day exponential moving averages and returning to a long-term downtrend.
Source: xStation
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