Smaller than expected sales decline boosts shares as chipmaker tries to recover from misjudging demand
Intel announced a massive $18.7 billion set of restructuring and asset impairment charges on Thursday in an attempt to clear the decks and accelerate its effort to rebuild its competitiveness.
Its forecast of $13.3 billion to $14.3 billion in revenue for the current quarter and pro forma earnings per share of 12 cents came in ahead of Wall Street estimates of $13.6 billion in revenue and 8 cents in earnings. Your work questions answered: My hours have been cut but someone new has been hired. Can my employer do this?Most of the costs were excluded from the non-GAAP measure of earnings that analysts use to judge the company’s underlying performance. However, $3.1 billion of the charges, related mainly to a write-down of equipment that had been acquired to make chips on the Intel 7 manufacturing node, were taken against non-GAAP profits.
The $3.1 billion charge reflected Intel’s excessive optimism during the pandemic about the level of future demand for its chips, leading it to buy more equipment than it needed, David Zinsner, chief financial officer, told the Financial Times.Had it not been for that charge, Intel would have reported non-GAAP earnings of 17 cents a share for the quarter. Its revenue for the quarter fell 6 per cent to $13.3 billion, but still topped expectations of about $13 billion.
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