Three months after a painful earnings report that scorched Intel Corp. shares, the company booked nearly $19 billion in restructuring charges but said business trends are now improving.
The results underscored "solid progress" Intel is making to reduce costs, simplify its portfolio and be more efficient, Chief Executive Pat Gelsinger said in a statement.
Shares were rising more than 7% in the extended session Thursday.
Intel's third-quarter revenue was $13.3 billion, down 6% from $14.2 billion in the year-ago quarter and ahead of the FactSet consensus for $13 billion. Revenue rose sequentially from $12.8 billion in the second quarter.
For the fourth quarter, Intel's revenue guidance brackets the consensus view but came in slightly above the midpoint. The company is calling for $13.3 billion to $14.3 billion in revenue, while analysts tracked by FactSet were expecting $13.7 billion.
Intel's sales have come under pressure as the company has lost share in traditional servers and seen the personal-computer market struggle. Additionally, companies are spending up on artificial-intelligence graphics processing units, which may be leaving fewer dollars to go around for the central processing units that Intel sells.
John Pitzer, the company's corporate vice president of investor relations, said in an interview that data-center market share is "stabilizing."
As far as Intel's own AI business, Gelsinger said the company won't hit its target for $500 million in Gaudi revenue this year as Intel sees slower-than-anticipated uptake and goes through a product transition.
Revenue from the client group, which houses PCs, fell 7% to $7.3 billion. Sales from the data center and AI unit rose 9% to $3.3 billion, while network and edge revenue increased 4% to $1.5 billion.
Intel posted an adjusted gross margin of 18.0% for the third quarter, significantly below the 38.7% adjusted gross margin seen in the second quarter and well short of the company's 38.0% guidance target.
"Restructuring charges meaningfully impacted Q3 profitability as we took important steps toward our cost reduction goal," Chief Financial Officer David Zinsner said in a release.
The adjusted gross margin was impacted by roughly $3 billion in manufacturing impairment charges, Pitzer said.
The company's other charges didn't impact non-GAAP metrics but included almost $10 billion in charges related to a valuation allowance for deferred tax assets, as well as goodwill impairment related to Mobileye Global Inc. and more than $2 billion in charges related to sizable layoffs.
For the fourth quarter, Intel models a rebound to a 39.5% adjusted gross margin.
The company lost $16.6 million, or $3.88 a share, in the third quarter, swinging from earnings of $300 million, or 7 cents a share, in the year-earlier quarter.
Adjusted for $15.9 billion of impairment charges and $2.8 billion ofrestructuring charges, Intel lost 46 cents a share. That compared with Wall Street expectations of a loss of 2 cents a share, according to FactSet.
"It's a little bit of a noisy quarter because of the charges, but we would characterize it as a good quarter in Q3" with "business trends improving and guiding modestly above the street in Q4," Pitzer said.
Intel's foundry business booked a 8% revenue decline to $4.4 billion as well as an operating loss of $5.8 billion.
The company separated out foundry financials earlier this year in a bid to better highlight the different profiles of its businesses, as the foundry business is incurring large losses while the design business is more established.
