On October 27th, American chip giant Intel released its latest quarterly report. Although financial data shows that the company has not yet bottomed out, it has exceeded analysts' expectations and the company is also very optimistic about its fourth quarter forecast. After Thursday's trading, Intel's stock price surged by 9%.
Still not out of the trough
The first quarter was the largest loss record in Intel's history, the second quarter was the first time it returned to profitability after two quarters of losses, and the third quarter data showed that Intel was gradually coming out of a trough. According to the financial report, Intel's total revenue in the third quarter was $14.16 billion, a year-on-year decrease of 8%, marking the seventh consecutive quarterly sales decline, but still higher than the market's expected $13.53 billion; The net profit attributable to shareholders was $310 million, a 71% decrease from $1019 million in the same period last year; But (non US accounting standards) adjusted net profit was $1.739 billion, an increase of 14% compared to $1.526 billion in the same period last year; The adjusted earnings per share were $0.41, a significant 30% decrease from $0.59 in the same period last year, but much better than the loss of $0.04 per share in the first quarter and $0.13 per share in the second quarter of this year.
Intel's single quarter revenue performance (from Q4 2020 to present) Chart: Chen Xiachang
Changes in net profit attributable to parent company in a single quarter of Intel (from the fourth quarter of 2020 to the present) Chart: Chen Xiachang
In addition, Intel's gross profit in the third quarter was $6.018 billion, compared to $6.535 billion in the same period last year; The gross profit margin is 42.5%, a decrease of 0.1 percentage points compared to 42.6% in the same period last year. In the third quarter, Intel's cash from business operations was $5.8 billion.
Autonomous driving has become a highlight
Although Intel improved its financial report in the second quarter, turned losses into profits, and exceeded expectations in the third quarter, the main reliance is on its progress in reducing costs by $3 billion this year. At the beginning of the year, the company significantly reduced its dividends, announced plans to save $10 billion annually by 2025, and will lay off employees. However, the company also has many highlights in its operations.
According to business division, Intel's customer computing business had a net revenue of $7.867 billion in the third quarter (including chip business revenue), compared to $8.128 billion in the same period last year, a decrease of 3% year-on-year; The revenue of the data center and AI (artificial intelligence) business in the third quarter was $3.814 billion, compared to $4.255 billion in the same period last year, a decrease of 10% year-on-year; The revenue of Intel's network and edge computing business in the third quarter was $1.45 billion, compared with $2.133 billion in the same period last year, down 32% year on year; Mobileye, an autonomous driving unit under Intel, had a revenue of $530 million in the third quarter, compared to $450 million in the same period last year, an increase of 18% year-on-year.
In fact, as the world's largest computer chip manufacturer, Intel has been seeking markets outside of computers in recent years, with artificial intelligence chips becoming one of Intel's core competitors. In order to strengthen its strength in the field of artificial intelligence chips, it not only acquired FPGA manufacturer Altera for $16.7 billion, but also acquired autonomous driving technology company Mobileye for $15.3 billion.
In the field of artificial intelligence and driverless chips, Intel is developing customized chips to meet the special needs of artificial intelligence chips by means of acquisition, whether it is the acquisition of Movidius, a machine vision company, or Yogitech, a company that provides security tools for autonomous vehicle chips, in order to meet the challenges of Nvidia and other competitors, which also shows Intel's gamble in the field of driverless chips, Whether success can be achieved remains to be tested by the market.
Intel CEO Pat Gelsinger reiterated that he will continue to cut costs this year. For artificial intelligence, Intel executives emphasize that AI will fundamentally change and reshape the PC experience. Intel is laying out for the arrival of a new era and will launch the Intel Core Ultra processor codenamed "Meteor Lake". This is Intel's first built-in neural network processor (NPU), which can bring energy-efficient AI acceleration and local inference experience to PCs. On December 14th of this year, the first fifth generation Intel Xeon processor and Core Ultra processor will be released, working together to promote the large-scale application of AI on all workloads in the client, edge, network, and cloud.
Stock price underperformance of competitors
In terms of returns to investors, Intel will distribute a quarterly dividend of $0.125 per share to the company's common shareholders this quarter, totaling $500 million.
Although Intel's financial data has not yet bottomed out, it still exceeds Wall Street analysts' previous expectations, and the company's outlook for fourth quarter revenue and adjusted earnings per share also exceeds expectations.
After the financial report was released, Intel's post market stock price surged by nearly 9%. Since the beginning of the year, Intel has risen by 23%. During the same period, the S&P market rose nearly 8%, the Nasdaq Composite Index rose over 21%, and the Philadelphia Semiconductor Index rose 26%. And its competitor NVIDIA has risen by 176% this year, while AMD has risen by over 44%.
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