Intel issues weak guidance, says it will slash expenses this year

Intel Corporation announced its first-quarter results, surpassing analysts’ expectations. However, the company issued a less optimistic outlook and revealed plans to reduce expenses in the upcoming year under CEO Lip-Bu Tan. The stock dropped in after-hours trading following the news.

Intel’s earnings per share were 13 cents adjusted, exceeding the 1 cent anticipated by analysts. Revenue reached $12.67 billion, higher than the expected $12.3 billion. For the current quarter, Intel expects revenue around $11.8 billion, below the average analyst estimate of $12.82 billion. Earnings are projected to break even, while analysts were anticipating a profit of 6 cents per share.

The company cited increased uncertainty due to evolving trade policies and regulatory risks affecting the macro environment. Intel’s Chief Financial Officer, David Zinsner, expressed concerns about the potential for an economic slowdown and rising recession risks during an earnings call with analysts.

In the first quarter, Intel reported a net loss of $800 million, or 19 cents per share, attributed to higher costs of sales and write-downs. This contrasts with a net loss of $400 million, or 9 cents per share, in 2024. This marks the first earnings report since Tan assumed the role of CEO in March, succeeding Pat Gelsinger.

To enhance efficiency, Intel plans to reduce operational and capital expenses by streamlining management layers. The company aims to lower operational expenses to $17 billion in 2025, down from the previous target of $17.5 billion, and reduce capital expenses to $18 billion, down from the previous target of $20 billion. Job cuts are expected, particularly among managers, as part of the restructuring.

Tan has been implementing changes within the company, including appointing Sachin Katti as the chief technology officer and head of AI. Employees at Intel have been informed that they will transition to working four days per week in the office by September. The data center group reported a sales increase to $4.1 billion, while revenue from chips for PCs in the client computing group declined by 8% to $7.6 billion. The foundry business saw revenue of $4.7 billion, primarily from manufacturing chips for Intel’s other divisions.