Intel (INTC) reported its second quarter earnings after the bell on Thursday, beating on revenue but missing on earnings per share (EPS) due to impairment charges. The company said it is also cutting its headcount by 15% and expects to have approximately 75,000 employees by the end of the year.
Intel also offered an upbeat Q3 revenue forecast of between $12.6 billion and $13.6 billion. Wall Street was expecting $12.6 billion.
The chipmaker’s stock initially rose more than 2% following the report.
Shares of Intel are off 28% over the last 12 months, though up 13% year to date. Intel’s market capitalization as of Thursday was $98 billion. Rival AMD’s (AMD) market cap tops out at $262 billion. AI leader Nvidia (NVDA) dwarfs both companies with a market cap north of $4 trillion.
For the quarter, Intel saw an adjusted loss per share of $0.10 on revenue of $12.8 billion. Wall Street was anticipating adjusted EPS of $0.01 on revenue of $11.8 billion, based on Bloomberg’s analyst consensus data. The company reported adjusted EPS of $0.02 and $12.8 billion in revenue in the same period last year.
Intel said it took an $800 million non-cash impairment and accelerated depreciation charges related to “excess tools with no identified re-use” and roughly $200 million one-time period costs for Q2. The company has also canceled planned projects in Germany and Poland and is slowing construction of its facility in Ohio.
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Intel’s Products business, which includes sales of its laptop and desktop CPUs and data center and AI chips, brought in $11.8 billion versus expectations of $10.9 billion.
Intel is dealing with increased competition from AMD (AMD) and the rising threat from Qualcomm (QCOM), which is pushing further into the PC chip space with its Snapdragon X Plus and X Elite chips.
Intel’s still-nascent Foundry business generated $4.4 billion in revenue versus expectations of $4.3 billion, up 2%. The division, which is meant to produce chips for third-party customers using Intel’s processor technology, is still struggling to make meaningful headway.
Intel previously announced it reached agreements to build chips for Microsoft and Amazon using its 18A technology, which former CEO Pat Gelsinger championed to help grow the company’s manufacturing segment.
But according to Reuters, CEO Lip-Bu Tan is considering promoting its next-generation 14A technology to customers. That could mean Intel would face a massive write-down on 18A.
However, Intel would still continue to use 18A for its own internal products, including CPUs for consumer and enterprise devices. And an Intel spokesperson said the company had no comment on the matter.
