Business

Intel shares rise on cost-cutting pledge

Slump in computer demand is dragging on sales and profits

Intel employs more than 5,000 people in Ireland and has plans to increase this to 6,500. Photograph: Yuichi Yamazaki/AFP

Fri Oct 28 2022 - 11:49

Intel shares climbed in late trading on Thursday night after the chipmaker pledged to slash costs, an effort to weather a persistent slump in computer demand that is dragging down sales and profit and obstructing its turnaround efforts.

The company said actions including headcount reductions and slower spending on new plants will result in savings of $3 billion (€3 billion) next year, with annual cuts swelling to much as $10 billion by the end of 2025. Third-quarter profit and revenue tumbled, Intel said Thursday in a statement, and it again scaled back 2022 revenue and profit targets.

Chief executive Pat Gelsinger had been banking on a rapid rebound in semiconductor sales to help fund his ambitious plans to restore Intel to its former dominance in the $580 billion industry. Gelsinger, who predicted three months ago that the third quarter would be the nadir for the company’s performance, instead said that demand for Intel’s computer processors has fallen off even more sharply than projected and the outlook remains dour.

Intel employs more than 5,000 people in Ireland and has plans to increase this to 6,500.

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“The worsening macro was the story and is the story,” Mr Gelsinger said in an interview. “There’s no good economic news. Predicting a bottom for the market for computer chips currently would be “too presumptive, he said.

Third-quarter net income was $1 billion, or 25 cents a share, down from $6.8 billion, or $1.67 a share, in the same period a year ago. Revenue dropped 20% to $15.3 billion. Before certain items, profit was 59 cents a share. Wall Street was looking for a profit of 33 cents on sales of $15.4 billion.

Intel shares initially fell, then rose about 5.4% in late trading following the announcement. Earlier, they closed at $26.27. — Bloomberg

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