Intel Reports Second-Quarter 2024 Financial Results and Announces $10 Billion Cost Reduction Plan

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Financial Performance

Intel reports second-quarter 2024 financial results, reporting a revenue of $12.8 billion, which marks a slight decline of 1% compared to the same period last year. The company’s GAAP earnings per share (EPS) were $(0.38), indicating a loss, while the non-GAAP EPS came in at $0.02. Looking ahead, Intel has projected third-quarter 2024 revenue to range between $12.5 billion and $13.5 billion. The company anticipates a further decline in EPS with a forecast of $(0.24) on a GAAP basis and $(0.03) on a non-GAAP basis. CEO Pat Gelsinger acknowledged the disappointing results but reassured stakeholders that strategic measures are being implemented to improve efficiency and competitiveness in the latter half of the year.

Cost Reduction Plan

In response to the financial challenges, Intel reports second-quarter 2024 financial results and Intel has announced a comprehensive $10 billion cost reduction plan aimed at enhancing operational efficiency and market competitiveness. This plan includes significant spending cuts and operational restructuring. Intel will reduce its workforce by over 15%, with the majority of these reductions expected to be completed by the end of 2024. The company also plans to cut non-GAAP research and development (R&D) and marketing, general and administrative (MG&A) expenses to approximately $20 billion in 2024 and $17.5 billion in 2025.

Capital expenditures are set to be reduced by more than 20%, with gross capital expenditures projected to fall to between $25 billion and $27 billion in 2024, and net capital spending between $11 billion and $13 billion. Additionally, Intel will suspend its dividend starting in the fourth quarter of 2024 to prioritize liquidity and support strategic investments. This move underscores Intel’s commitment to rebuilding its financial foundation and sustaining long-term shareholder value.

Technological and Strategic Highlights

Intel Reports Second-Quarter 2024: Despite the financial challenges, Intel made significant progress in its technological and strategic initiatives. The company achieved key milestones in its Intel 18A process technology, including the release of the 1.0 Process Design Kit (PDK) and the successful power-on of its first client and server products, such as Panther Lake and Clearwater Forest. These advancements mark important steps in Intel’s effort to regain leadership in process technology.

Intel’s AI initiatives continue to gain momentum, with the company shipping over 15 million AI PCs since December 2023, surpassing its competitors. The upcoming release of the Lunar Lake AI CPU, scheduled for the third quarter, is expected to further strengthen Intel’s position in the AI market. The company also introduced its next-generation Intel® Xeon® 6 processors and the Intel® Gaudi® 3 AI accelerator, which are designed to enhance performance and efficiency in data centers.

On the foundry front, Intel is nearing the completion of its ambitious five-nodes-in-four-years strategy, with Intel 18A on track for manufacturing readiness by the end of 2024 and production volumes expected in the first half of 2025. The company has also made strides in advanced packaging technologies with the release of the 1.0 PDK and partnerships with industry leaders like Ansys, Cadence, Siemens, and Synopsys.

In addition to these technological advancements, Intel has announced its second Semiconductor Co-Investment Program (SCIP) agreement, a joint venture with Apollo related to Intel’s Fab 34 in Ireland. This initiative is part of Intel’s Smart Capital strategy, which aims to provide financial flexibility to accelerate its global manufacturing operations and maintain a robust balance sheet.

Overall, while Intel faces short-term financial pressures, the company’s strategic cost reduction plan and continued investment in technology and innovation are poised to strengthen its market position and drive sustainable growth in the future.

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