Intel crashes as Q2 results, guidance miss expectations; lays off 15% of staff

Intel (NASDAQ:INTC) shares tumbled 10.5% in extended trading after the semiconductor giant offered up a weaker-than-expected guidance for the coming quarter on top of its second-quarter results and said it would let go 15% of the company and suspend its dividend.

Looking ahead, Intel expects third-quarter revenue to be between $12.5B and $13.5B, well below the $14.39B analysts were anticipating. It also anticipates losing an adjusted $0.03 per share, with adjusted gross margins of 34.5%.

Analysts were anticipating adjusted earnings of $0.30 per share.

AMD (AMD) and Nvidia (NVDA) fell in sympathy with Intel’s results and guidance.

For the period ending June 30, the Pat Gelsinger-led Intel earned an adjusted $0.02 per share as revenue fell 0.09% year-over-year to come in at $12.83BB. The company’s Client Computing Group accounted for $7.41B in revenue, below the $7.53B analysts were expecting.

Datacenter and AI revenue came in at $3.05B, while revenue attributed to Mobileye (MBLY) was $440M. The Network and edge segment generated $1.34B, while the company’s foundry segment saw revenue rise 4% year-over-year to $4.3B.

A consensus of analysts expected Intel to earn an adjusted $0.10 per share on $12.95B in revenue during the fourth-quarter.

“Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity,” said David Zinsner, Intel CFO.

“Intel continues to struggle with regaining its footing as management attempts to transform the company into the go-to foundry of choice for advanced chip manufacturing,” Seeking Alpha analyst Michael Del Monte said.

In addition to the financial results, Intel said it would cut 15% of its 110,000 workforce as it looks to streamline its operations and “meaningfully cut spending and headcount.” Earlier this week, it was reported that Intel was planning to cut thousands of jobs.

“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet,” Zinsner added. “We expect these actions to meaningfully improve liquidity and reduce our debt balance while enabling us to make the right investments to drive long-term value for shareholders.”

Intel also said it would cut spending on new plants and equipment in 2024 by more than 20%, as it now expects to spend between $25B and $27B. Expenses for 2025 will be between $20B and $23B in gross capex spending.

Intel also said it would suspend its dividend starting in the fourth quarter as it looks to prioritize liquidity to support its transition.

The company will hold a conference call at 5 p.m. EST to discuss the results.