Struggling chip giant Intel late Thursday beat estimates for the first quarter but guided well below views for the current period. Intel stock fell in extended trading.
The Santa Clara, Calif.-based company earned an adjusted 13 cents a share on sales of $12.67 billion in the March quarter. Analysts polled by FactSet had expected Intel to earn 1 cent a share on sales of $12.3 billion in the first quarter. In the year-earlier period, Intel earned 18 cents a share on sales of $12.72 billion.
Under generally accepted accounting principles (GAAP), Intel lost 19 cents a share in Q1.
For the current quarter, Intel expects to break even on an adjusted basis with revenue of $11.2 billion to $12.4 billion, or $11.8 billion at the midpoint. It expects to post a GAAP loss of 32 cents a share in the second quarter. Wall Street had been modeling earnings of 7 cents a share on sales of $12.82 billion in Q2. In the year-ago period, Intel earned 2 cents a share on sales of $12.83 billion.
The Q1 report was the first since Lip-Bu Tan took over as chief executive on March 18. He has been tasked with turning around the storied chipmaker.
Late Thursday, Tan announced a corporate initiative to cut expenses and improve operations.
"I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products," he said in a news release. "We are going back to basics by listening to our customers and making the changes needed to build the new Intel."
The initiative includes job cuts to eliminate management layers and streamline the organization to enable faster decision-making.
A Bloomberg report on Tuesday said Intel planned to cut over 20% of its staff in an effort to eliminate bureaucracy and create a more nimble operation. Tan wants to rebuild an engineering-driven culture at Intel, the report said.
In after-hours trading on the stock market today, Intel stock dropped more than 5% to 20.39. During the regular session Thursday, Intel stock rose 4.4% to close at 21.49.
Another focus area at Intel is the company's foundry operations. Intel is rumored to be seeking partners to shore up the chipmaking division.
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