Thread regarding Intel Corp. layoffs

Dip, dip...

  • Intel's stock dives sharply on data center weakness

https://siliconangle.com/2020/10/22/intels-stock-dives-sharply-data-center-weakness/

Intel Corp.’s stock lost almost 10% of its value in after-hours trading today on weakness in its data center business, despite reporting third-quarter results more or less in line with Wall Street’s expectations.

The chipmaker reported a profit before certain costs such as stock compensation of $1.11 per share on revenue of $18.3 billion. Wall Street’s forecast was almost spot on, with analysts having forecast a profit of $1.11 per share on slightly lower revenue of $18.25 billion.

In a statement, Intel Chief Executive Bob Swan (pictured) said the company had managed to deliver “solid” third-quarter results that exceeded its own expectations, despite COVID-19 affecting “significant portions” of its business.

No doubt Swan was referring to Intel’s data center business. The Data Center Group, which sells chips to cloud computing providers and server makers, reported revenue fell 7% from a year ago, to $5.91 billion. Intel said that was primarily the result of lower demand from enterprises and governments in the quarter, though its data center cloud revenues did manage to grow by 15%. The unit wasn’t helped by an average selling price that was 15% lower than it was in the same period a year ago.

“This is the first quarter I have seen COVID-19 negatively impact the company,” Moor Insights & Strategy analyst Patrick Moorhead noted.

Intel’s Client Computing Group, which sells personal computer chips, did better. It reported $9.85 billion in revenue, up 1% from a year ago, helped by a bump in PC sales during the third quarter as people kept buying new machines to work from home more efficiently.

Intel recently announced that it plans to sell its NAND flash memory chip business to South Korean firm SK Hynix Inc., and the performance of its Non-Volatile Memory Solutions Group probably showed why. NAND flash sales make up the vast majority of that business, and it reported revenue of just $1.15 billion in the quarter, down 11% from a year ago.

Charles King of Pund-IT Inc. told SiliconANGLEthat Intel’s earnings report shows that the company is in a tough situation. He said that although it had initially benefited from trends such as working from home at the start of the COVID-19 pandemic, it was under pressure from larger economic issues that were forcing customers to cut costs wherever possible, including in the data center.

“Add in substantial threats from ambitious competitors including AMD and Nvidia, which have many products priced substantially lower than Intel’s, and something has to give,” King said.

The growing costs of sales meant that Intel’s operating margins were down, to just 27.6% this quarter, from 33.6% one year ago. Operating margin in the data center group took the worst hit, down to 32% from 49% the year before.

Moorhead said this may have been from Intel selling more 10-nanometer chips in the quarter. He noted that these are more expensive to manufacture than its previous-generation 14-nanometer chips.

Looking ahead, Intel said it’s expecting fourth-quarter earnings of $1.10 per share on revenue of $17.4 billion, just ahead of Wall Street’s forecast of $1.07 in profit on $17.36 billion revenue.

In a conference call with analysts, Swan said that despite the challenges it faces, Intel was actively executing a diversified growth strategy and that it operates several multibillion-dollar businesses fueled by the explosion in data and the emergence of new technologies such as artificial intelligence and 5G networks.

#news

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Post ID: @OP+17zMuIpy

14 replies (most recent on top)

The diversity was achieved by hiring the wives of employees of a certain race.

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Post ID: @3xkm+17zMuIpy

The diversity thing is false. How many minorities do you see hired at Intel and how many are retained? Just look around each group and see what you find? If anything, discrimination by subpar managers with no more than a high school diploma is at an all time high.

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Post ID: @3ebc+17zMuIpy

Intel PE’s know they are useless, they know they cannot get employed anywhere else, they know they won’t get laid off, so why do any work?

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Post ID: @2cbs+17zMuIpy

Milk the cow, and use that milk to buy stock and outsource.

Don’t worry they will conserve a lot of cash at 7nm! They have three 10nm factories that have tens of billion of capital wasted and several more tens squandered on RD and designs late and wasted.

There will be likely only one little 7nm saving a more than ten billion dollars as they move manufacturing to Foundry as the first small but step to ending intel silicon legacy, nothing in Hillsboro suggest it can be changed a FUBAR to big to recover from

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Post ID: @2ilh+17zMuIpy

Data Center group is top heavy. Too many Grade 9s & above. Some of the PEs are in a rest & vest mode. I have heard a PE talking about American politics a lot in meetings rendering any meeting useless. In Bangalore site all hands-on work is done by contractors from HCL, Aricent etc. The technical leaders spend time making spreadsheets and PowerPoint.

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Post ID: @1glr+17zMuIpy

intel spent 12Billion to buy back stocks year to date. I think that the annual commitment is 14B. I believe this is one of the worst uses of money. As you see with companies such as AMD, stock prices reflect future expectations, higher the expectations for future growth, higher the stock prices.

Expectation for Growth Is the key point. Also, Intel’s performance and productivity could have benefited much more if they spent a fraction of 14billion to pay employees better and stop unnecessary layoffs.

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Post ID: @1njp+17zMuIpy

Our earnings calls with investors have a low energy, apologetic tone. Since both Bob and George have CFO backgrounds, Bob, instead of giving finance questions to George, is spending more of his times adding more details and color to the finance related questions. So essentially, you have two CFOs answering all questions.

I don’t like Bob’s representation anymore. He said that this year was the most challenging year of his professional career. I mean come on. This is whining. This is true for everyone. Other tech CEOs don’t make this type of statements. The year, in certain ways, has been good for the tech industry.

I also didn’t like some of the product highlights such as DG1. Everyone knows that this is not a highlight. And then we have DG2 powered on highlight. Embarrassing. When did we put power on as a highlight. I believe Intel is still one of the best semi companies around.

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Post ID: @1mjx+17zMuIpy

No, dump some VPs and Directors. Most are useless. Ask their employees. Don’t let 7s go - 8 and above - could do with some thinning.

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Post ID: @1whd+17zMuIpy

Data Center use and demand are at all time highs worldwide. It is strange to read that COVID-19 had some negative impact on Intel as a result of customer cost cutting when all of the other semi manufacturers are saying just the opposite. Hmmm, I think that the writing is on the wall for TMG and that Intel will never ever produce a 7 nm chip in HVM. Q3 - Q4 will be a very busy time for Intel HR - similar to 2015 disastrously sanctioned layoff. However, this time it will be different, and Intel will have to deal with a massive brain drain, layoffs, terrible moral and the Q4 announcement that Intel will be sourcing 7nm chips from TSMC. Good luck to everyone.

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Post ID: @egm+17zMuIpy

Diversity goal.
I still can't understand why this is important

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Post ID: @jwj+17zMuIpy

Don't worry, chief Bob is an engineer with a clear perspective on the product roadmap, he knows how to take engineering decisions and invest in R&D. /s

This is what happens when marketing and finance guys take over, they just focus on short term profit, cut everything they can, sell whatever they can so they can keep their big bonuses, then they can vest in peace.

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Post ID: @ucq+17zMuIpy

Who cares about money, Intel did achieve the diversity goal after spending the allocated $300M, right?

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Post ID: @mgk+17zMuIpy

The operating margin drop is the scariest part. Last time it dropped below 22% is 2016. It's 24.5% this quarter. It'll be really hard to support all those middle management with this kind of margin. Time to let go some long term G7's.

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Post ID: @uqq+17zMuIpy

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