Referreport
CPU manufacturer Intel presented figures for the second quarter of 2024 last night after the stock market closed in the USA. The US company generated sales of 12.8 billion US dollars, a decrease of 0.9 percent compared to the previous year and 150 million less than analysts’ estimates. Earnings were 2 cents per share, compared to 13 cents in the previous year and analysts had expected 10 cents. Intel cited an accelerated ramp-up of production of AI PC products and overcapacity as reasons, among others. The biggest problem, however, is the outlook for the third quarter: Intel expects sales of between 12.5 and 13.5 billion US dollars and a loss of 3 cents per share. Analysts expected revenues of 14.39 billion US dollars and a profit of 32 cents per share. The disappointing outlook sent Intel shares plummeting. In pre-market trading, the stock is currently down more than 20 percent at around 23 US dollars.
Intel cuts jobs and dividends
In response, Intel announced a massive cost-cutting program in the course of its quarterly figures. Around 15 percent of the 110,000 jobs are to be eliminated, and spending on marketing, administration and research is to be reduced. Intel wants to reduce costs from around 20 billion US dollars this year to 17.5 billion next year, and further savings are expected in 2026. The chip manufacturer also plans to invest around 20 percent less in its own business than announced. In 2024, investments are expected to settle at between 25 and 27 billion US dollars, and in 2025, 20 to 23 billion US dollars are planned. “We are taking proactive steps to increase our profits and strengthen the balance sheet,” says CFO David Zinsner.
As a result, the dividend will also be eliminated from the fourth quarter of 2024. However, Intel has stated that it will resume payments if the company’s financial situation improves sustainably.
Chip manufacturer continues to restructure
Intel is currently in a phase of transformation. The chip manufacturer has to catch up with a technological gap with its own products and at the same time wants to become a contract manufacturer for semiconductors from other companies. Intel is also relying on billions of US dollars in funding from the USA’s Chips Act. This is intended to bring semiconductor production back to the home country in order to achieve greater independence from Taiwan and China, for example. It remains to be seen whether Intel will achieve its goals with the self-imposed savings program. The company sees itself at least as still on the right track: “We expect that the measures will enable us to significantly increase our liquidity and reduce our liabilities, while enabling us to generate shareholder value in the long term with the right investments,” says CFO Zinsner.
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Source: German