Shares of Intel jumped 8 per cent in after hours trading on Thursday as the company returned to profitability following two consecutive quarters of losses.
The world's largest chip maker by revenue, reported a net profit of $1.5 billion in the second quarter of its fiscal year that ended on July 1, compared with a net loss of $454 million in the same period last year.
Despite the return to profit, revenue fell an annual 15 per cent to $12.9 billion, Intel said in a statement. This is the sixth consecutive quarter of declining sales.
Earnings per share rose to $0.35.
Intel is forecasting third-quarter revenue in the range of $12.9 billion and $13.9 billion.
The company's stock price, which is up nearly 30 per cent since the start of the year, jumped 8 per cent to $37.26 a share in after hours trading on Thursday.
Shares settled about 0.6 per cent higher to $34.55 at market close, giving the company a market value of $144.11 billion.
“Our second-quarter results exceeded the high end of our guidance as we continue to execute on our strategic priorities, including building momentum with our foundry business and delivering on our product and process road maps,” said Pat Gelsinger, Intel’s chief executive.
“We are also well positioned to capitalise on the significant growth across the AI continuum by championing an open ecosystem and silicon solutions that optimise performance, cost and security.”
The company said it had more than $8.3 billion in cash and cash equivalents as of July 1, down from $11.1 billion at the end of last year.
Its client computing group, which produces chips for personal computers, added $6.8 billion in overall sales in the first quarter – almost 12 per cent less than the same period last year.
The company earned $4 billion from its data centre and artificial intelligence division, nearly 15 per cent down on a year-on-year basis.
Sales of Intel’s autonomous driving subsidiary Mobileye were down about 1 per cent to $454 million in the three-month period, while sales of the company’s network and edge group were down about 38 per cent to $1.4 billion in the three-month period.
In the second quarter, Intel spent more than $4 billion on research and development activities, about 7 per cent down compared to the same period last year.
To boost its expansion plans, last month, Intel agreed in principle to build a new manufacturing plant in Israel.
It has also announced to invest up to $4.6 billion to build a new semiconductor assembly and test unit in Poland to expand its operations globally.
Intel has declared a quarterly dividend of nearly $0.13 per share on the company’s common stock, which will be payable on September 1 to shareholders of record as of August 7.
“Strong execution, including progress towards our $3 billion in cost savings in 2023, contributed to the upside in the quarter,” said David Zinsner, Intel’s chief financial officer.
“We remain focused on operational efficiencies and our smart capital strategy to support sustainable growth and financial discipline.”
