Intel back to profitability after successive quarters of losses

[midian182]

What just happened? After experiencing two straight quarters of losses, including the largest in the company's history, Intel has returned to profitability in the second quarter as the PC market started to show signs of recovery. Chipzilla recorded $1.5 billion in profit from $12.9 billion in revenues during the three months to July 1, pushing its share price up 8% in after-hours trading.

Team Blue saw its revenue fall 15% compared to the same period a year earlier, but it's still a huge improvement over the first quarter when the company's $2.8 billion loss – a 30% YoY decline - represented the worst in its entire history. Q1 was the second consecutive quarter Intel had seen a loss after hemorrhaging $700 million during the previous three months.

Intel's chip sales were down 12% in Q2 to $6.8 billion, but that was still better than the 21% analysts had been expecting, and a big improvement over the 38% decline in Q1.

Helping Intel were Global PC shipments. They've been in freefall for a while now, but while they still declined around 11.5% in the June quarter, it was better than the previous two quarters' 30% drop.

"It was a very good quarter, we exceeded expectations on top line, on bottom line, we raised guidance, and we look forward to the continued opportunities that we have of accelerating our business and seeing the margin improvement that comes in the second half of the year," said CEO Pat Gelsinger, on an earnings call with analysts.

Gelsinger pointed to cost-saving measures, confidence in the company's roadmap, and the strength of its client and datacenter groups for the return to profitability.

Intel recently announced that it was ceasing development of its NUCs, passing the baton onto partners to carry on the business; Asus was named as the first company to continue producing the tiny PCs. The move came soon after Intel sold its server-building business to Taiwanese company Mitac in April. The cost-cutting measures are part of Intel's plan to slash $3 billion off its annual spending this year and $8 billion to $10 billion by 2025.

Despite the positive news, CFO David Zinsner urged some caution, noting a "moderate" recovery of global macroeconomic conditions and a "modest" recovery for Intel across the rest of 2023. There was also a warning that excess inventory in server CPUs will continue into the second half of the year.

Almost all of Intel's business units experienced YoY revenue declines, including sales in its data center and artificial intelligence business, which were down 15% to $4 billion from $4.7 billion in the year-ago quarter. Gelsinger did say, however, that the company has enough customers to sell at least $1 billion worth of its AI chips through 2024.

The only segment not to experience a yearly decline was Intel Foundry Services (IFS), which saw revenue increase to $232 million, up from $57 million a year ago. Gelsinger said some of the IFS sales increase came from advanced packaging, which involves placing multiple chip components from another company into a single "package" to lower costs and increase performance.

"There's a lot of interest in the industry for advanced packaging, because it is essential to deliver high-performance computing and AI," Gelsinger said. "So we expect a lot more business coming our way in that area."

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https://www.techspot.com/news/99580-intel-back-profitability-after-successive-quarters-losses.html

 

[Neatfeatguy]

So, based on the title alone - Intel was not making any money until this last quarter. They were in the red and this quarter finally put them in the black.

Let's get real here - these companies are not losing money. They are not in the red. They are only not making as much money as they were maybe 1-2 years ago, but they are still profiting.

I feel no pity for these big corporations making billions of dollars every quarter and crying that they didn't make as many of billions that they "projected" to make and only made billions of dollars, but fell short of their projected profits.

Boo-hoo. Let me cry for them for making so much money even if they feel short of their projected profit margin.

 

[Uncle Al]

The all too typical business cycle .... nothing new there ....

 

[Watzupken]

To me, this is a very feeble recovery for Intel and can quickly go south quickly. The market in which Intel operates is no longer lacking in competition. When Intel lost their fab advantage, they really had to work very hard to try and claw back market share. They are therefore, banking on their fab business to buoyant their profits. But they face very strong competition in the fab business as well from the likes of TSMC and Samsung.

 

[Kashim]

Let's get real here - these companies are not losing money. They are not in the red. They are only not making as much money as they were maybe 1-2 years ago, but they are still profiting.

Let's get real here - when a company's revenue is $1 billion and they spent $2 billion during that quarter, that is a $1 billion LOSS. Yes, they are in the red. I want to say this is Economics 101, but it's not even that. It's basic math. They're not profiting when there's a loss. Explain to me how they're profiting when they spend more money in a quarter than they bring in during that quarter?