Intel (INTC) earnings report Q3 2023

Intel shares rose about 7% in after-hours trading after the company reported third-quarter earnings on Thursday that beat expectations for profit and sales, even as its revenue declined from the year-earlier period.

Here’s how Intel did versus LSEG (formerly Refinitiv) consensus expectations for the quarter ended Oct. 1:

• Earnings per share: 41 cents, adjusted, versus 22 cents expected
• Revenue: $14.16 billion versus $13.53 billion expected

For the fourth quarter, Intel expects earnings of 23 cents per share, adjusted, on revenue of $14.6 billion and $15.6 billion, versus LSEG expectations of 32 cents per share on $14.31 billion in sales.

Intel posted net income of $297 million, or 7 cents per share, versus net income of $1.02 billion, or 25 cents per share in the same quarter last year. Intel’s gross margin for the quarter was 45.8%, which was flat year over year.

Revenue fell 8% from $15.33 billion a year ago, the seventh consecutive quarter of declining sales. However, the chipmaker told investors on Thursday that it expects revenue to grow again in the current quarter.

Intel CEO Pat Gelsinger told analysts on a call the company would cut costs by about $3 billion this year. Chief Financial Officer David Zinsner said that Intel’s earnings per share benefited from the company controlling expenses, with operating expenses declining 15% from a year ago. Intel said it has 120,300 employees, down from 131,500 last year.

Here’s how Intel’s business units performed:

• Sales in Intel’s Client Computing group, including laptop and PC processor shipments, were down 3% to $7.9 billion.
• Intel’s Data Center and AI division, which offers server chips, saw sales decline 10% to $3.8 billion. Intel said it was seeing competitive pressure and a smaller overall market for server processors.
• Mobileye, a publicly traded Intel subsidiary for self-driving car parts, was a bright spot, growing 18% to $530 million in sales. 
• Intel foundry services, the company’s nascent chip-manufacturing business, remains a small part of Intel with $311 million in revenue, but it grew nearly 300% from the year-earlier period. Intel said a major customer had committed to using some of Intel’s capacity, and had made a prepayment.
• Intel’s network and edge division, which sells networking parts, reported sales were off 32% to $1.5 billion. 

Earlier this month, Intel said it would treat its programmable chip unit as a stand-alone business, and would seek to list it on public markets in two years. It’s currently part of Intel’s Data Center and AI group, and saw sales decline sequentially during the quarter.

“As we discussed earlier this month, after a period of strong growth and tight supply, the FPGA [field-programmable gate array] business is entering a period of inventory burn,” Zinsner said.

Intel told investors that it believed that its chips will be…