SAN FRANCISCO: Intel said Thursday its earnings beat earlier expectations, as the computer chip giant faces pressure to come up with bold ways to stave off fierce competition and an active shareholder.
Intel said it generated $ 20 billion in revenue during the fourth quarter of last year, little change from the previous year, amid strong personal computer sales.
Silicon Valley reported net income of $ 5.9 billion for the quarter, down $ 1 billion from the same period the previous year.
Intel said its board of directors approved an increase in cash dividends of $ 1.39 a share in what could be a move to calm investor Dan Loeb of Third Point, who has called on Intel to consolidate its weak position in the chip market.
“We significantly exceeded our expectations for the quarter, capping a record fifth year in a row,” outgoing CEO Bob Swan said in the earnings statement.
The company said full-year revenue was $ 77.9 billion, a record high.
Swan will step down on February 15th, and lead Intel to Pat Gelsinger.
News of the change came after a letter sent to the company in December from Third Point, led by Loeb.
The hedge fund told the company that it should consider outsourcing its manufacturing processes to keep pace with competitors in the sector such as Taiwan-based TSMC and South Korean giant Samsung.
Intel is likely to – He pulled some out of chipmaking to be more flexible, said Gelsinger while participating in a earnings call.
“I am confident that the majority of our products for 2023 will be manufactured in-house,” said Gelsinger.
“At the same time, given our expanding portfolio, we will likely expand our use of offshore foundries for certain technologies and products.”
He said he was also planning leadership changes at the company, and promised to share more of what he has in mind for Intel after taking over the CEO position.
“Frustration is growing about technology laggards in this market,” said Dan Ives, an analyst at Wedbush.
“Intel, IBM, and others are old tech companies where many new kids are gaining a stake in this shift in the technology paradigm.”
Loeb’s criticism of Intel is not new, and Intel has selectively recruited outside foundries in the past, according to analyst Patrick Moorehead of Moor Insights and Strategy.
Moorhead predicted Intel would be strategic when it came to using third parties to make chips.
While Intel remains one of the world’s leading chip companies, it has lagged its competitors in the fast-growing mobile segment, and its chips are being phased out by Apple, which is developing its microprocessors for its Mac computers.
Meanwhile, trends in telework, school, and social media led by the pandemic are reviving interest in laptops and desktops and increasing the need for data centers, all of which require chips.
“We need to become more resilient in a very competitive market,” Gelsinger said.
“We need to innovate with passion, boldness and speed.”
Swan was appointed interim CEO in 2018 and was appointed permanently the following year after his predecessor Brian Krzanic resigned over an affair with an employee who violated the company’s non-fraternal policy.
Gelsinger is currently the CEO of VMware software company but has experience at Intel.
I have described taking charge of Intel as his “dream job”.
“This is a national treasure,” Gelsinger said.
“For me, it’s an opportunity to help and put Intel and the US in the tech leadership position, without a doubt.”