Losers.*
After dropping 5.5% during the regular session the stock is down another 19.14% (-$5.56) at $23.49.
From Yahoo Finance, August 1:
Chip giant Intel (INTC) reported its second quarter earnings after the bell on Thursday, missing on the top and bottom lines and announcing a $10 billion cost reduction plan to cut 15% of its workforce and suspend dividend payments. In a release, Intel said it expects Q3 revenue of between $12.5 billion and $13.5 billion, well short of analysts' expectations of $14.3 billion.
Shares of the chipmaker plummeted more than 16% on the news.
Intel is in the midst of a massive turnaround effort as it seeks to regain market share lost to rival AMD (AMD) while working to build out its AI chip and third-party foundry businesses. All of this comes as the PC market is in the early stages of a recovery after eight consecutive quarters of declines following the explosive growth the industry experienced at the onset of the COVID-19 pandemic.
The company reported earnings per share (EPS) of $0.02 on revenue of $12.8 billion. Analysts were looking for EPS of $0.10 and revenue of $12.9 billion. The company saw EPS of $0.13 on revenue of $12.9 billion in the same quarter last year, according to analyst estimates compiled by Bloomberg.
The chipmaker is also expected to lay off thousands of workers in the coming days, according to Bloomberg. The company is spending billions of dollars on factories and other facilities around the world as it seeks to reclaim its share of the chip manufacturing industry, which is dominated by Taiwan Semiconductor (TSMC).
Intel’s Data Center and AI segment brought in $3.05 billion in the quarter, below expectations of $3.07 billion. The Data Center and AI business offers Intel a chance to grow its revenue thanks to the massive demand for CPUs and GPUs to power AI applications. But Intel’s GPUs aren’t as in demand as Nvidia's (NVDA), which are seen as the best overall chips for AI processing.
Shares of Intel are off 38% year to date versus AMD, which is down just 3.7%. Nvidia shares are up 127%....
"Intel CEO: Nvidia Got 'Extraordinarily Lucky' in Dominating the AI Market" (NVDA; INTC)
My Little Crony: Intel, The Buyback Scam And $19.5 Billion From The Chips Act (INTC)
First up, some background on how Intel lost its mojo.
Stock buybacks by the issuing corporations were illegal in the United States until 1982 when the SEC decided, despite the practice being a form of stock manipulation—artificially boosting a company's share price above what it would otherwise be—and a straight-up tax dodge—lifting the share price results in capital gains which are taxed at much lower rates than the ordinary income that a cash dividend is subject to—when the SEC decided to implement rule 10b-18 (17 CFR § 240.10b-18 - Purchases of certain equity securities by the issuer and others.)
For a company's upper management stock buybacks have the added benefit of dramatically lifting the value of stock-based compensation, to the point that cash and perks are now looked at as merely spending-money while the real wealth-builders are the stock grants and options to purchase same.I'll skip the discussion of how the differential between ordinary income and capital gains tax rates no longer achieve their stated purpose—capital investment and job creation—and go straight to one of the best academic researchers in this area of the finance business, coincidentally using Intel corporation as one of his examples.....
Here's five years of luck, though it is hard to make out, INTC has done worse than flatline:
Intel could probably use that $100 billion they spent on stock buybacks.
