Intel’s stock (INTC) fell sharply early Friday after the company reported mixed second-quarter earnings and unveiled a 15% workforce reduction. Shares plunged nearly 9% in pre-market trading, wiping out early gains following a brief rally after the report.
Q2 earnings breakdown
Intel reported:
- Revenue: $12.8 billion (above estimates of $11.8 billion)
- Adjusted EPS: Loss of $0.10 (missed Wall Street estimate of a $0.01 profit)
- Product revenue: $11.8 billion, beating expectations of $10.9 billion
- Foundry business revenue: $4.4 billion, slightly above the $4.3 billion forecast
The miss on earnings was attributed to:
- $800 million in non-cash impairment and depreciation charges
- $200 million in one-time period costs
- Ongoing restructuring under CEO Lip-Bu Tan
Layoffs and cost-cutting measures
Intel plans to cut 15% of its workforce, reducing headcount to around 75,000 employees by year-end. The company is:
- Exiting its automotive business
- Outsourcing marketing functions
- Slowing construction of its Ohio chip facility
- Canceling planned expansion in Germany and Poland
These cuts reflect the company’s push to streamline operations amid rising competition and economic uncertainty.
Stock performance and market reaction
- INTC closed Thursday at $22.63, down 3.66%
- Pre-market Friday: Shares dropped to $20.60, a nearly 9% decline
- Intel stock is down 28% year-over-year, though still up 13% year-to-date
Despite the revenue beat, investors responded negatively to the earnings miss and the scale of restructuring. Intel’s market cap now stands at $98 billion, significantly behind rivals:
- AMD: $262 billion
- Nvidia: $4+ trillion
Competitive pressures mounting
Intel continues to face stiff challenges from:
- AMD, which has been gaining market share in PC and data center chips
- Qualcomm, now expanding into the PC market with its Snapdragon X series
- Nvidia, which dominates the AI chip market
Intel’s Foundry business remains a long-term bet. While it generated $4.4 billion this quarter, it’s yet to prove it can scale meaningfully.
What’s next for Intel?
Looking ahead, Intel issued an optimistic Q3 revenue forecast of $12.6 to $13.6 billion, slightly ahead of consensus expectations.
CEO Lip-Bu Tan reaffirmed Intel’s commitment to its 18A chip manufacturing technology, which it hopes will attract new third-party clients, including Microsoft and Amazon.
Still, analysts remain cautious. With restructuring efforts ongoing and macroeconomic headwinds intensifying, the road to recovery remains uncertain.
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