Intel posts surprise Q3 profit as turnaround plan gains traction
What's the story
Intel has posted better-than-expected third-quarter sales, indicating a recovery in demand for its core x86 processors for PCs. The company's stock surged by 6% in extended trading after the announcement. This is Intel's first report since the US government became its largest shareholder in August with a 10% stake.
Financial results
Revenue and EPS expectations for Q3 and Q4
Intel's third-quarter revenue stood at $13.65 billion, beating the estimated $13.14 billion. The company's adjusted earnings per share (EPS) was 23 cents, although this isn't directly comparable to analyst estimates due to differences in accounting practices. For the fourth quarter, Intel expects a revenue of about $13.3 billion and an adjusted EPS of eight cents. While the revenue expectation is slightly below analyst expectations of $13.37 billion, the EPS expectation matches at eight cents per share.
Income details
Intel's net income and government funding
In the third quarter, Intel reported a net income of $4.1 billion or 90 cents per share, compared to a net loss of $16.6 billion in the same period last year. The company also received $5.7 billion from the US government during this quarter as part of an $8.9 billion investment deal negotiated by the Trump administration in August.
Strategic outlook
Foundry business challenges and advanced chip production
Intel is optimistic about its future, with CEO Lip-Bu Tan saying that "demand for our chips exceeds supply," a trend expected to continue into next year. However, the company faces challenges with its foundry business, which makes chips for others and needs $100 billion in capital investment. It is yet to secure a major customer as well. Despite these hurdles, Intel started production of its most advanced chips in Arizona during the quarter.