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Pat Gelsinger stumbles in Intel turnaround bid

Intel's stock tumbles after third-quarter revenue disappoints

Intel Corp shares plunged 11% on Friday, October 28, after the chipmaker badly missed Wall Street expectations for third-quarter revenue, underscoring the challenges Chief Executive Pat Gelsinger faces in turning around the company.

Intel's revenue fell 20% to $15.3 billion in the quarter ended Oct. 1, well below the $18.2 billion analysts had expected, according to Refinitiv data.

Shrinking market share

The lackluster performance deepened concerns about Intel's market share losses to advanced chip designer Advanced Micro Devices Inc (AMD) and contract chipmaker Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Intel blamed the revenue shortfall on "broad-based weakness" across its business units, including its data center and personal computer groups.

The data center group, which sells chips for servers used by cloud computing companies, reported a 33% decline in revenue to $4.2 billion. The personal computer group, which sells chips for laptops and desktops, saw revenue fall 17% to $8.1 billion.

Intel also reported a net loss of $664 million, or 16 cents per share, compared with a profit of $6.8 billion, or $1.67 per share, a year earlier.

CEO's turnaround plan

Gelsinger, who took over as CEO in February 2021, has been trying to reverse Intel's decline by investing heavily in new chip manufacturing plants and technology.

In March, Intel announced plans to spend $20 billion on a new chip factory in Ohio. The company has also been working to improve its chip manufacturing process and has licensed chip designs from TSMC.

However, Gelsinger's turnaround plan has been hampered by delays in the development of Intel's next-generation chips and by the global chip shortage.

Intel now expects full-year revenue to be about $63 billion to $64 billion, down from its previous forecast of $65 billion to $68 billion.

The company also said it expects to reduce its workforce by about 20% over the next year as part of a cost-cutting plan.