Intel recorded the biggest loss in its history: 16.6 billion dollars!

Intel announced the largest loss in its history with $16.6 billion in the third quarter of 2024. The company’s restructuring expenses, the depreciation of its assets and the losses of its chip production unit stood out as the factors that led to this record loss.

Shares rose despite huge losses

Intel’s revenues fell 6% in the third quarter compared to last year, exceeding expectations and reaching $13.3 billion. It increased by 500 million dollars compared to the previous quarter. The company’s gross profit margin also dropped to a historical level of 15%. Surprisingly, the company’s stock initially rose as much as 12% following the news, before falling slightly but gaining 7% later.

Intel’s product line reported profits and generated approximately $12.997 billion in revenue. Intel Foundry, the company’s chip manufacturing division, recorded a loss of $5.8 billion despite generating $4.4 billion in revenue. Intel’s recent large factory investments are seen as the biggest reason for this loss.

Pat Gelsinger, Intel’s CEO, said in his review of financial results: “Our third quarter results demonstrate that we are making solid progress against the plan we outlined last quarter to reduce costs, simplify our portfolio and improve organizational efficiency. We increased our revenue above the average value we stated in our guidance.” “And we are moving quickly to position the business to create sustainable value. The momentum we are building to maximize the value of our x86 franchise across our product portfolio and the strong interest Intel 18A is seeing from foundry customers reflects the impact of the actions we are taking and the opportunities ahead.”

Intel’s consumer Client Computing unit continued to be the best-performing division within the company, generating $7.3 billion in revenue in the third quarter. The unit managed to achieve an operating profit margin of 37.1% and an operating profit of $2.7 billion, although it showed a small decrease compared to last year.

Intel’s Data Center and Artificial Intelligence unit increased its revenue compared to last year, generating $3.3 billion in revenue. The unit’s operating profit rate increased to 10.4%, but its net profit remained at only $300 million.

Restructuring and past losses are the biggest reasons

In the third quarter, Intel faced expenses of more than $18.5 billion in connection with a plan to cut $10 billion in annual spending on top of mass layoffs last quarter. Laying off 15,000 employees by the end of the year will save Intel a large amount of cash in the future. However, in the short term, it needs to make a lot of severance pay and early retirement payments.

According to Pat Gelsinger, the bulk of the layoffs occurred during the quarter. But even this accounted for only $2.2 billion of the costs. Company CFO David Zinsner announced that the largest of the losses resulted from the decision to write off $9.9 billion worth of deferred tax assets accumulated due to losses in the last three years.