Intel Corporation (NASDAQ:INTC) saw its profits beat expectations but missed on revenue in its third quarter as its two biggest business units dragged down the bottom line.
The company reported earnings per share (EPS) of $0.59 versus $0.34 expected on a non-GAAP basis.
However, revenue came in at $15.3 billion versus consensus estimates of $15.4 billion.
READ: Intel spin-out Mobileye jumps more than 37% on market debut
On a year-over-year basis, Intel’s earnings and revenue were down 15% and 59%, respectively.
Still, shares jumped more than 7% in after-hours trading in New York.
Intel’s business units reported a mixed bag of revenue, with its two biggest business units – Datacenter and AI and Client Computing – coming up short.
Intel’s Datacenter division reported $4.2 billion in revenue, down 27% from the same quarter last year, while its Client Computing Group reported $8.1 billion, also down 17% compared to 3Q 2021.
Mobileye spinout part of broader turnaround strategy
The just-spunout Mobileye division delivered $450 million in revenue during the last quarter on Intel’s balance sheet, which was a 38% increase year-over-year.
Mobileye was trading well on its first day as a separate entity, with its shares jumping more than 37% in its debut, but at the IPO price of $21 per share, it was valued at $17 billion, significantly lower than the roughly $50 billion valuation Intel had previously hoped for.
The move to list Mobileye on the Nasdaq is part of Intel’s broader strategy to turn around its core semiconductor business, which has lagged behind rivals in recent years.
Intel said it would use some funds from the Mobileye listing to build more chip factories as it embarks on a capital-intensive process to become a foundry for other chipmakers.
Layoffs expected
Intel revised its FY2022 guidance of between $63-$64 billion, which it said reflected “continued macroeconomic headwinds.”
“Despite the worsening economic conditions, we delivered solid results and made significant progress with our product and process execution during the quarter,” said Pat Gelsinger, Intel CEO.
“To position ourselves for this business cycle, we are aggressively addressing costs and driving efficiencies across the business to accelerate our IDM 2.0 flywheel for the digital future.”
Intel is expected to announce a round of layoffs and other cost-cutting measures shortly.
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