In the third quarter, Intel’s client computing group revenue, which includes PC sales, was $8.1 billion (approximately Rs. 66,700 crore).
Intel lowered its full-year profit and sales forecasts on Thursday and warned of layoffs, but a better-than-expected performance in its personal computers division helped drive shares higher. In after-hours trading, the company’s stock increased by more than 5%. They have fallen about 47 percent this year, behind both the S&P 500 and the Philadelphia SE Semiconductor index.
The firm’s CEO, Pat Gelsinger, said the lower fourth-quarter forecast reflected economic uncertainty that was likely to linger into next year, and that the business was taking its time to build up data center sales, which had declined 27 percent in the third quarter.
Intel has reduced its capital investment projection for this fiscal year from $27 billion to $25 billion (approximately Rs. 2,05,900 crore) (roughly Rs. 2,22,400 crore).
When asked about possible layoffs, Gelsinger told Reuters that “people actions” would be part of a cost-cutting strategy. In 2023, Intel announced it will cut costs by $3 billion (approximately Rs. 24,700 crore).
“The amount we can accomplish in terms of human expenses is a small portion of our entire cost structure. So improving efficiency in the production network is much more critical to our economics than people cost,” Gelsinger told Reuters, adding that flexible workforce modifications may be “very quick.” “.
He said that the changes will begin in the fourth quarter but did not indicate how many staff would be impacted.
In late 2020, right before Gelsinger took over, Intel had 110,600 workers. By early October of this year, the number had risen to 131,500.
The Bright Side
Macroeconomic headwinds have clouded the future for Intel’s key businesses, the PC and data center.
According to Summit Insights Group analyst Kinngai Chan, Intel’s “PC Client segment was the silver lining as sales improved sequentially, providing investors some optimism that share erosion has slowed considerably.”
Client computing revenue increased to $8.1 billion (approximately Rs. 66,700 crore) in the third quarter from $7.7 billion (about Rs. 63,420 crore) in the second quarter, accounting for Intel’s PC sales.
“We expect its data center share loss should also reduce in the next year,” Chan added.
Amazon posted profits on Thursday that fell short of analyst forecasts for sales at its cloud unit, AWS, which increased 28 percent to $20.5 billion (roughly Rs. 1,68,850 crore). AWS and other cloud service providers are major clients of chipmakers such as Intel and are critical to their revenue development.
Intel has been losing market share in the data center sector, according to Gelsinger, and it did so again in the third quarter.
“Our products weren’t delivering new goods like Sapphire Rapids, but now that they are in full production and we’re going to scale them rapidly, we’re better positioned moving ahead than we were,” he told Reuters, adding that scaling up will take many quarters.
However, he said that Intel gained “significant” market share in the PC area in the third quarter.
Inflation has impacted demand for computers and other electronic devices, leading electronics businesses to cancel orders for components such as chips in order to clear inventories.
According to Counterpoint Research, PC shipments declined 15.5 percent in the third quarter. According to Intel, the PC market will drop in the mid-to-high teens by 2022.
Nonetheless, Gelsinger said that Intel expects its total addressable market – the market it is seeking – to be 270-295 million devices in 2023.
The business now forecasts annual sales of around $63 (roughly Rs. 5,18,870 crore) billion to $64 billion (roughly Rs. 5,27,110 crore) in 2022, up from a prior estimate of $65 (roughly Rs. 5,35,370 crore) billion to $68 billion (roughly Rs. 5,60,110 crore). Its initial prediction was for around $76 billion (roughly Rs. 6,26,000 crore). According to Refinitiv statistics, analysts predicted yearly sales of $65.26 billion (approximately Rs. 5,37,540 crore).
Intel reduced its full-year adjusted earnings per share expectation from $2.30 to $1.95 (approximately Rs. 162). (roughly Rs. 189).
© Thomson Reuters 2022
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