Intel beats on sales in first earnings report since U.S. government became top shareholder

Intel reported better-than-expected revenue on Thursday, signaling that demand for its core x86 processors for PCs has recovered. The stock jumped 6% in extended trading.

Here's how Intel did in the third quarter versus LSEG consensus estimates:

• Revenue: $13.65 billion versus $13.14 billion estimated
• EPS: 23 cents, adjusted, not comparable to analyst estimates

Intel recorded a per-share loss of 37 cents in the quarter to account for shares in escrow that will be released to the U.S. government as part of its $8.9 billion investment. The Trump administration negotiated the investment in August, purchasing 433.3 million shares at $20.47 per share.

The chipmaker said it expects revenue in the fourth quarter of $13.3 billion at the midpoint, with adjusted earnings per share of 8 cents. Analysts expected $13.37 billion in revenue and earnings of 8 cents per share. Intel said its outlook excludes the impact from a recent sale of its Altera subsidiary.

For the third quarter, Intel reported net income of $4.1 billion, or 90 cents per share, versus a net loss in the year-ago quarter of $16.6 billion. Intel said it received $5.7 billion from the U.S. government during the quarter.

"There is limited precedent for the accounting treatment of such transactions," Intel warned investors in its press release.

Intel said that it met with the Securities and Exchange Commission to gain approval for its approach to accounting for the government's stake, but it doesn't yet have an answer because of the shutdown. The company warned that it may revise its results in the future.

"We are fully committed to advancing the Trump administration's vision to restore semiconductor production and proudly welcome the US government as a essential partner in our efforts," Tan told investors on an earnings call.

The company also took a $5 billion in investment from one-time rival Nvidia in September. As part of that deal, the two companies will integrate Intel's central processors (CPUs) alongside Nvidia's artificial intelligence graphics processors, which currently make up 90% of the AI chip market.

Intel said that demand for its chips outpaced supply, a trend that it expects to continue through next year.

The company said that its products group reported $12.7 billion in sales, up 3% on an annual basis. Of that, $8.5 billion was from its Client Computing Group, which includes chips for PCs and laptops. Another $4.1 billion in sales were for data center CPUs, which were down 1% on a year-over-year basis. Intel said it hopes that its deal with Nvidia can help revive growth in its data center CPU business.

Investors are focused on the future of Intel Foundry, which manufactures chips for other companies, not just Intel's. The division requires $100 billion in capital investment, and it's yet to secure a major customer. Intel said it started production of its most advanced chips in Arizona during the quarter.

Intel's foundry reported $4.2 billion in sales during the quarter, down 2% on an annual basis. The entirety of the revenue was from Intel using the foundry to build its chips, the company said.

The company said it had 88,400 employees, down from 124,100 at the same time last year.

Correction: A prior version of this story had an incorrect employee count.

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