Intel’s (INTC) stock is down 7% after the chipmaker lowered its forward guidance and announced plans to cut costs over the remainder of this year.
Intel reported strong first-quarter financial results, announcing earnings per share (EPS) of $0.13 U.S., which was far ahead of the $0.01 U.S. forecast on Wall Street.
Revenue in the January through March quarter totaled $12.67 billion U.S. versus $12.30 billion U.S. that was the consensus expectation of analysts.
Unfortunately, the strong print was overshadowed by weak forward guidance from Intel, which makes microchips and semiconductors.
Intel said it expects revenue for the current quarter of $11.80 billion U.S., lower than the average analyst estimate of $12.82 billion U.S.
The company said its second-quarter earnings will be breakeven, while analysts were looking for a profit of $0.06 U.S. per share.
Intel’s management team said its guidance reflects elevated uncertainty driven by the macro-economic environment.
They also said that Intel plans to cut operational and capital expenses, removing management layers, to become more efficient.
The company will target $18 billion U.S. in capital expenses this year, down from a previous target of $20 billion U.S.
The cost reductions will include job cuts, especially for managers, but Intel has not yet finalized the number of cuts, said management.
This was the first earnings report for Intel under new Chief Executive Officer (CEO) Lip-Bu Tan. He took over as CEO in March of this year after previous CEO Pat Gelsinger stepped down.
Prior to today (April 25), Intel’s stock had risen 6% on the year to trade at $21.49 U.S. per share.