Bob Swan, then interim CEO and chief financial officer of Intel Corp., responded during the inauguration of the company’s research and development facility in Bengaluru, India, on November 15, 2018.
Samyukta Lakshmi | Bloomberg | Getty Images
Intel shares closed 6.46% on Thursday after the chipmaker reported earnings and earnings that exceeded investors’ expectations and its own forecast, driven by strong computer sales.
However, details of Intel’s earnings became available on financial wires a few minutes before the markets closed, after which Intel gave up its profits and the share fell by more than 2% at one point.
The strong earnings report for the quarter that ended in December last year is a critical moment for the chip giant, as Thursday’s report is the latest with Bob Swan as CEO. On February 15, Pat Gelsinger takes over.
This is how Intel did:
- Earnings per share (EPS): $ 1.52, adjusted, compared to $ 1.10 expected by Refinitiv consensus estimates.
- Income: $ 20 billion, compared to $ 17.49 billion expected by Refinitiv consensus estimates.
- Forecast: Q1 2020 revenue of $ 18.6 billion and a profit of $ 1.03.
Intel also increased its cash dividend by 5% to $ 1.39 per share. However, its own forecasts for revenue, profit and operating margin for the current quarter were lower than year-on-year.
Intel said the strength in computer sales helped exceed its own expectations. It is said that 33% more computers were sold with Intel chips than at the same time last year, especially laptops. Computer sales have been strong over the past year because people who work from home or go to school want to upgrade their computers.
A leadership transition is not the only challenge facing Intel. In December, activist hedge fund Third Point called on Intel’s board of directors to make several changes to the company, including considering outsourcing chip production or selling parts of the business, such as acquisitions. .
Third Lo’s CEO Dan Loeb also highlighted Intel’s biggest problem in his December letter when he noted that Intel had fallen behind Asian disc foundries in terms of its ability to manufacture the most advanced processors.
Intel’s latest chips use a 14 nanometer process, as it has done since 2013, while competing chips manufactured by TSMC currently use a 5 nanometer process. A smaller process is better because more transistors can fit in the same chip, which increases power and efficiency.
Intel customers such as Apple, Amazon and Microsoft have developed their own processors or indicated that they want to do so.
Gelsinger, who was recently CEO of VMWare, has a technical background and would expect Intel to be more competitive in chip manufacturing. Intel said it began production of ten nanometer chips during the quarter, and that it will begin manufacturing more this quarter.
Intel said Mobileye, its subsidiary of self-driving automotive technology, saw sales increase 39% during the quarter compared to the same period last year. But Mobileye is still a small part of Intel – in 2020 it reported $ 967 million in sales, compared to Intel’s computer group, which reported $ 40.1 billion in sales during the year.