News Intel 2Q24 Financial Results

[Hitman928]

Reserved for Intel earnings results after the markets close.

 

[Hitman928]

Oh boy, buckle up.

Intel missed on both revenue and earnings. Revenue was actually slightly down Y/Y.

• Intel press release (NASDAQ:INTC): Q2 Non-GAAP EPS of $0.02 misses by $0.08.
• Revenue of $12.83B (-0.9% Y/Y) misses by $150M.
• Shares -10%.

Guidance for Q3 is not good. More to follow.

Intel's guidance for the third quarter of 2024 includes both GAAP and non-GAAP estimates as follows:

Q3 2024		GAAP		Non-GAAP
Revenue		$12.5-13.5 billion
Gross Margin		34.5%		38.0%
Tax Rate		34%		13%
Earnings (Loss) Per Share Attributable to Intel—Diluted		$(0.24)		$(0.03)

https://seekingalpha.com/news/4132521-intel-non-gaap-eps-of-0_02-misses-0_08-revenue-of-12_83b-misses-150m

 

[Hitman928]

Implementing comprehensive reduction in spending, including a more than 15% headcount reduction, to resize and refocus.

Intel currently has ~120K employees, so they will be laying off close to 20K people. That's worse than reported earlier this week.

 

[Hitman928]

They are suspending the dividend again in the 4th quarter of this year.


Segment break down:



Client group continuing to make the most revenue, but it seems like margins are too low to keep the company profitable.

 

[Hitman928]

Intel expects further cuts in 2025 and 2026.

Debt has increased to over $48B.

 

[adroc_thurston]

nearly 20k heads lobbed off, jesus.
Never imagined Intel cosplaying ~2011/2012 era AMD, yet here we are.

 

[Saylick]

I knew it was going to be bad, but not this bad... May the Lord have mercy on Pat's soul. Going to need a biblical miracle to turn this around.

 

[adamge]

I knew it was going to be bad, but not this bad... May the Lord have mercy on Pat's soul. Going to need a biblical miracle to turn this around.

All money is riding on 5N4Y, as the chip design teams have failed to lead any and all markets they play in.

 

[Saylick]

Client group continuing to make the most revenue, but it seems like margins are too low to keep the company profitable.

Margins being low is what happens when you keep cutting prices to sell what we now know are degrading chips in order to maintain market share. Although products made on Intel 7 will remain cheaper to manufacturer, they can't just keep pumping out RPL without addressing the elephant in the room, which is that those same chips have problems.

 

[AcrosTinus]

Time for the company to be nimble and hungry again. The fabs will only show impact towards the end of the decade.
I'm still bullish on Intel, they have to turn from a blue whale into an orca.

If AMD can do it with a decade+ of garbage, Intel can do it.

Should it not be the case, the consumer DIY space is over... (AMD won't be selling you anything good with no competition).

 

[adroc_thurston]

nodes ain't looking too hot either.
downgrade?

Margins being low

No, MTL is just expensive.
You see it ramp in Q1/Q2 and opmargin goes down.

 

[Markfw]

I don't think this accounts for
1) the huge amount of RMA's that will be coming.
2) The result of that lawsuit which is destined to win a big judgement.

 

[adroc_thurston]

I don't think this accounts for
1) the huge amount of RMA's that will be coming.
2) The result of that lawsuit which is destined to win a big judgement.

DIY stuff, not relevant.

 

[Saylick]

Time for the company to be nimble and hungry again. The fabs will only show impact towards the end of the decade.
I'm still bullish on Intel, they have to turn from a blue whale into an orca.

If AMD can do it with a decade+ of garbage, Intel can do it.

Should it not be the case, the consumer DIY space is over... (AMD won't be selling you anything good with no competition).

I agree, but the fab side is an albatross around their necks. They may need to spin off Intel Foundries so that the design side isn't saddled with the negative cash flow.

 

[Hitman928]

Here's a quick and dirty graphic splicing their Q2 and Q1 results together for comparison. Revenue was basically flat but margins fell hard.

 

[Saylick]

DIY stuff, not relevant.

But the damage to Intel's mindshare? Hard to quantify that.

 

[adroc_thurston]

But the damage to Intel's mindshare? Hard to quantify that.

They didn't have that much outside of Xeons in enterprise dinosaur lands.
This isn't the Cult of Leather Jacket.

 

[Saylick]

Here's a quick and dirty graphic splicing their Q2 and Q1 results together for comparison. Revenue was basically flat but margins fell hard.

View attachment 104306

-15.3% operating margin. Holy smokes.

 

[H433x0n]

nodes ain't looking too hot either.
downgrade?

No, that's the same as before. I think it might be the first time they publicized that 30% density increase but it hasn't changed.

 

[Saylick]

They didn't have that much outside of Xeons in enterprise dinosaur lands.
This isn't the Cult of Leather Jacket.

I don't know about that. I bet the average Joe still walks into Best Buy and has no problems with buying a computer with an Intel sticker on it. If their reputation is damaged by the 13th/14th gen issues enough where even average Joes ask sales reps in Best Buy to show them non-Intel computers only, that's when it will hurt.

 

[adroc_thurston]

No, that's the same as before

P sure 15% perf over i3 was i20a, but no more I guess.

I don't know about that. I bet the average Joe still walks into Best Buy and has no problems with buying a computer with an Intel sticker on it. If their reputation is damaged by the 13th/14th gen issues enough where even average Joes ask sales reps in Best Buy to show them non-Intel computers only, that's when it will hurt.

Nah, they don't care about stickers, they buy laptops.

 

[Abwx]

Intel expects further cuts in 2025 and 2026.

Debt has increased to over $48B.

At 100k$/year average employee cost that s 2bn/year saved, not that much for a 60bn/year revenue, so the additional layoffs are not that surprising but at some point there will be nothing left to layoff, they are paying for uncautious decisions like abandonning the memory and SSD markets among others.

 

[adroc_thurston]

they are paying for uncautious decisions like abandonning the memory and SSD markets among others.

NAND wasn't ever a big and profitable biz for Intel.

 

[ikjadoon]

They are suspending the dividend again in the 4th quarter of this year.

Client group continuing to make the most revenue, but it seems like margins are too low to keep the company profitable.

FWIW, CCG (Client Computing) operating margins look decent, but Foundry + DCAI (datacenter, AI) + NEX (network, edge) + Altera (FPGA etc) + Mobileye (automated driving) seem to all be quite weak:

Q2 2024 | Operating Margin per Segment | best to worst
CCG OM: 33.7%
Mobileye: 16.4%
NEX OM: 10.3%
DCAI OM: 9.1%
Altera OM: -6.9%
Foundry OM: -65.5%
Company Total OM: -15.3%







Source PDF: https://d1io3yog0oux5.cloudfront.ne...esentation/Q2+2024+Earnings+Deck+INTC.com.pdf

 

[Abwx]

NAND wasn't ever a big and profitable biz for Intel.

That s profitable enough if it help keeping the foundries busy, better than selling chips at slaughtered prices to compete against AMD at all costs, at the time i knew that it was one of the decisions that would backfire, you think that IFS will be that more profitable ?.