Shares of Intel Corp ($INTC) jumped over 5% in Friday’s pre-market session after the chipmaker reported better-than-expected third-quarter earnings and an upbeat guidance for the fourth quarter.
Revenue declined 6% year-over-year (YoY) to $13.28 billion but topped a Wall Street estimate of $13.02 billion. Earnings per share (EPS) came in at $0.17 versus an estimated loss of $0.02.
Notably, Intel posted its highest ever quarterly net loss of $16.6 billion, according to the Wall Street Journal. This was driven by restructuring charges and write-downs as the firm is implementing sweeping reforms for a turnaround.
CFO David Zinsner said restructuring charges meaningfully impacted Q3 profitability as the company took important steps toward its cost reduction goal.
“The actions we took this quarter position us for improved profitability and enhanced liquidity as we continue to execute our strategy. We are encouraged by improved underlying trends, reflected in our Q4 guidance,” he said.
Intel recognized $2.8 billion in restructuring charges in Q3, $528 million of which are non-cash charges and $2.2 billion of which will be cash settled in the future.
Apart from this, Intel also recognized $3.1 billion of charges, substantially all of which were recognized in cost of sales, related to non-cash impairments and the acceleration of depreciation for certain manufacturing assets.
Moreover, $2.9 billion of non-cash charges were associated with the impairment of goodwill for certain reporting units and $9.9 billion of non-cash charges were related to the establishment of a valuation allowance against U.S. deferred tax assets.
From a segmental point of view, Intel’s product revenue fell 2% YoY to $12.2 billion. Within products, the Client Computing Group (CCG) revenue slid 7% while Data Center and AI (DCAI) group revenue grew 9%. Network and Edge (NEX) revenue rose 4%.
Meanwhile, Intel Foundry witnessed an 8% decline in revenue. The chipmaker had announced earlier that it is planning to establish Intel Foundry as an independent subsidiary.
For the fourth quarter, Intel expects a revenue of $13.3-$14.3 billion and a gross margin of 36.5%. The company also guided for EPS of $0.12. Wall Street had expected a revenue of $13.66 billion and EPS of $0.08.
Following the earnings release, the majority of Stocktwits users were posting a bearish take on the stock.
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