“This is a time for a little austerity.”

Intel CEO Pat Gelsinger tasked his team with finding new cost savings as the chip giant tries to come back from a challenging second quarter as the company rebuilds for the future.

“This is the time for some austerity,” Gelsinger told Yahoo Finance on Friday. “We’ve had things built over the last decade that need to be cleaned up. It helps drive a faster pace of the transformation we’re currently going through.”

Gelsinger told investors on the company’s second-quarter conference call last week that he has left six companies since taking over as CEO in 2021. Most recently, the company exited its drone business.

A Volocopter 2x passenger drone is on display at the Intel booth at the Cebit tech fair in Hannover on June 11, 2018 (must read JULIAN STRATENSCHULTE/DPA/AFP via Getty Images)

In all, these six exits, Gelsinger said, have freed Intel to invest $1.5 billion elsewhere in its business. The company is also still on track to spin off its self-driving technology business Mobileye later this year, a move that should free up additional resources.

These business exits come at a critical time for Intel as it invests aggressively in its nascent foundry business and in new chips to reclaim market share from the likes of AMD. They also arrived as Intel’s struggles deepened in the second quarter due to product delays and declining consumer demand for PCs.

Here’s how Intel performed against Wall Street estimates for the second quarter:

  • 2Q Adjusted Sales: 15.32 billion dollars compared to 17.96 billion dollars

  • Adjusted Gross Margin 2Q: 44.8% vs. 51%

  • Adjusted Operating Margin 2Q: 9.2% vs. 18.7%

  • 2Q EPS Average: 0.29 USD for 0.69 USD

  • 3Q adjusted sales: From $15 billion to $16 billion compared to $18.7 billion

  • 3Q Adjusted EPS: 0.35 USD for 0.82 USD

  • Adjusted sales for the full year: 65 billion dollars to 68 billion dollars versus 75 billion dollars

  • Adjusted EPS for the full year: 2.30 USD vs 3.39 USD

Intel shares fell more than 8% in the Friday session. Seven Wall Street companies lowered their ratings on Intel shares, due to doubts about the business’s recovery in the fourth quarter.

Gelsinger told Yahoo Finance Live last week that business was “on the bottom,” with trends continuing to improve from there as product delays ease, seasonal forces increase and demand stimulated.

“Looking forward, we believe Intel’s weak report is likely to strengthen the company as a ‘show me a story’ so that advances in manufacturing technology, product competitiveness and financial returns are more visible to investors,” Deutsche Bank analyst Ross Seymour wrote in a note to clients. . “In our view, Intel’s first example of rebuilding credibility in its strategy is likely to come in Q422, as the company’s updated guidance indicates a significant increase in revenue and profit margins that will likely be seen as bullish until delivered.”

Seymour reiterated a suspension rating on Intel stock but lowered his price target to $38 from $45.

Brian Suzy It is a comprehensive editor and Announcer at Yahoo Finance. Follow Suzy on Twitter Tweet embed and on LinkedIn.

Click here for the latest trending stock indices for Yahoo Finance

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for apple or Android

Follow Yahoo Finance on TwitterAnd the FacebookAnd the InstagramAnd the FlipboardAnd the LinkedInAnd the Youtube

Leave a Reply

%d bloggers like this: