Intel Stock Plunges on Wider-Than-Expected Loss, Layoffs To Cut Costs

Intel (INTC) shares plunged in extended trading Thursday after the company posted a wider-than-expected loss and said it would lay off 15% of its workforce as part of a $10 billion cost-savings plan.

The chipmaker missed expectations on its top and bottom lines, swinging to a second-quarter loss of $1.6 billion from a profit of $1.5 billion a year earlier. Revenue of $12.8 billion was down 1% year-over-year.

“Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity,” CFO David Zinsner said.

Intel said it expects third-quarter revenue of $12.5 billion to $13.5 billion, well below the $14.3 billion analysts had been expecting. It projected a loss of 24 cents per share, while analysts had expected a profit of 3 cents. 

$10 Billion Plan To Lower Costs Includes Layoffs

In order to bring down costs, Intel said it would reduce its headcount by 15% by the end of 2024. Other cost-saving measures include lowering its research and development (R&D); marketing; and general and administrative spending to $20 billion in 2024, with further cuts in 2025 and 2026.

The company also said it would suspend its dividend starting in the fourth quarter. 

“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet,” Zinsner said.

Shares of Intel were down over 19% at $23.47 per share in extended trading as of 6:30 p.m. ET Thursday following the company’s earnings release.