Intel reduces full-year projections and plans staff cuts; battered stocks rise By Stocksak

© Stocksak. The Intel Corporation logo can be seen in a temporary office at the World Economic Forum 2022, Switzerland’s Alpine resort of Davos (May 25, 2022). REUTERS/Arnd Wiegmann

By Chavi Mehta, Jane Lanhee Lee

(Stocksak), – Chipmaker Intel Corp (NASDAQ: ) Thursday’s full-year profit and revenues forecast were cut by the company. Chief Executive Pat Gelsinger told Stocksak that people actions would be part a cost reduction program when asked about possible layoffs.

After-hours trade saw Intel shares rise 6% They had fallen by 47% so this year, putting them behind the and the.

Intel stated in its earnings release that it was focusing on $3 billion cost reductions by 2023. It also reduced its capital spending forecast for this fiscal-year to $25 billion, down from $27 billion in the previous forecast.

“The amount we can do with respect people costs is a small part of our overall cost structure. Gelsinger stated that driving efficiency in the factory network was more important for our economics than people costs. He added that adjustments of flexible workforces could be “quite immediate”.

He stated that the adjustments would begin in the fourth quarter but did not specify how many employees would be affected.

Intel had 110 600 employees in late 2020, just before Gelsinger took over. This number soared to 131,000. By October, it was at 131,000.

Recession fears and a slump in PC demand have dimmed the outlook for the market for data centers, which are both large markets for Intel.

According to Kinngai Chan, Summit Insights Group analyst, Intel’s “PC client business was the silver lining” as sequential sales grew giving investors some hope that share losses have moderated.

The revenue from the client computing group, which is responsible for Intel’s PC sales rose to $8.1 Billion in the third quarter, up from $7.7 Billion in the second.

Chan stated that “we believe its data center loss should also moderate going forward into next year.”

Amazon (NASDAQ: ) reported earnings on Thursday. This was below analyst expectations for its cloud business, AWS. AWS saw a 28% increase year-on-year, to $20.5 billion. AWS and other cloud service providers are key customers for chip makers like Intel and are crucial to their revenue growth.

Intel has been losing market shares in the data center market. Gelsinger reported that Intel lost market share again in the third-quarter. “Our products weren’t shipping new products such as Sapphire Rapids, however, those are now fully produced and we’re going to be ramping them aggressively, so we’re better positioned going ahead than we have,” he said to Stocksak, adding that it would take several quarters for the ramp to complete.

He stated that Intel had seen a significant market share increase in the PC segment over the third quarter.

The rising inflation has caused a surge in demand for computers, and other gadgets. This has forced electronics companies to cancel orders of components such as chips, as they struggle with clearing inventory.

Counterpoint Research data shows that PC shipments declined by 15.5% in third quarter. According to Intel, the 2022 market for PCs will be in the middle-to-high teens.

Gelsinger stated that Intel expects its total addressable market to be between 270-295 millions units in 2023.

The company now anticipates 2022 annual revenues of $63 billion to $64 billion, as opposed to the $65 billion to $68 million estimated earlier. Its original forecast was for $76 billion. According to Refinitiv data, analysts expect an average annual revenue of $65.26 trillion.

Intel’s full-year adjusted earnings per diluted share forecast was lowered to $1.95 from $2.30.

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