What happened
Investors were celebrating Intel's (INTC 1.15%) latest quarterly financial results today after the company reported better-than-expected top and bottom lines. The tech sector has generally disappointed investors lately, so the good news from the company was welcomed.
Not everything was fantastic for Intel in the quarter, though, and management said cost reductions are on the way. But investors viewed the latest quarterly results from a glass-half-full perspective Friday morning, and its share price had climbed 11% as of 11:28 a.m. ET.
So what
Intel reported adjusted earnings per share of $0.59 in the third quarter, which was down 85% from a year ago but far better than analysts' consensus estimate of $0.32 per share.
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Intel's total sales of $15.3 billion also topped Wall Street's consensus average of $15.2 billion but were down 20% from the year-ago quarter.
Tech companies have generally reported disappointing quarterly earnings lately, so investors were enthusiastic about the company outpacing analysts' expectations.
But Intel's latest financial report wasn't all good news. Management cut full-year revenue guidance from a range of $65 billion to $68 billion down to a range of $63 billion to $64 billion.
The company also lowered adjusted earnings guidance for the full year to $1.95 per share, down from its previous guidance of $2.30.
Those guidance revisions put Intel's estimates for the year below analysts' expectation of $65.2 billion in sales and earnings of $2.15 per share.
Now what
In addition to lowering its full-year guidance, Intel's management also gave a somewhat sobering assessment of the economy right now, with CEO Pat Gelsinger saying on the earnings call that "... we are planning for the economic uncertainty to persist into 2023."
Chief financial officer Dave Zinsner went even further, saying, "It appears that the current challenging market environment will extend well into 2023 with the potential for a global recession."
To help weather the uncertainty, Intel plans to reduce costs by $3 billion next year and increase its annualized cost reductions to between $8 billion to $10 billion by the end of 2025.
The cost-cutting will also affect employees, with Zinsner telling Barron's that there will be a "meaningful number" of layoffs.
So while investors were happy with Intel's better-than-expected results today, they may also want to prepare for the company to experience potentially difficult times in the coming quarters.
