Intel Losses Hit $16.6B As Restructuring Efforts Take A Toll

Arthur T Knackerbracket has processed the following story:

Intel posted a $16.6 billion loss in the third quarter - the largest in the silicon veteran's history - as it booked more than $18 billion in restructuring and impairment related charges.

While the loss was obviously not what Intel wanted, revenues for the quarter came in at the upper end of forecasts at $13.3 billion - up four percent from last quarter, though still down six percent from last year.

Executives expect Intel to continue to rebound in the fourth quarter, forecasting revenues of between $13.3 and $14.3 billion - a decrease of 7.14 and 13.6 percent year over year. In spite of this, the prospect of another flat to positive quarter of sequential revenue growth was enough to send the embattled chipmaker's share price skyward.

Intel's share price surged by up to 15 percent in after-hours trading on what investors saw as a positive outlook. However the biz has fallen a long way from its glory days, and faces numerous challenges with respect to ongoing restructuring costs which are expected to challenge profitability again in the third quarter.

During the third quarter, Intel faced in excess of 18.5 billion dollars in charges associated in part with its plan to cut 10 billion in annual spending - announced amid mass layoffs last quarter.

As you might expect, cutting 15,000 staff by the end of the year will save Intel a boatload of cash in the future. But in the short term it must write many severance and early retirement checks.

According to CEO Pat Gelsinger, the bulk of the layoffs occurred during the quarter - but even this only accounted for $2.2 billion of the charges. Another $528 million of restructure-related costs were somewhat vaguely attributed to "non-cash charges."

The largest of the losses were instead driven by the decision to write off $9.9 billion worth of deferred tax assets accumulated over the past three years of losses, CFO David Zinsner explained.

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