[HN Gopher] Intel returns to profitability after two quarters of...
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Intel returns to profitability after two quarters of losses
Author : bluedino
Score : 76 points
Date : 2023-07-27 20:23 UTC (2 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| fatfingerd wrote:
| By cost cutting measures, replacing the unrealistic dividends
| phase.. I have no idea why a ex-monopoly taking every action it
| can think of for accelerating its descent in market share would
| be seen positively for getting to barely profitable by steps that
| are no doubt sacrificing future sales.
| dwallin wrote:
| Because much of investor behavior is (arguably rationally) not
| driven by business fundamentals, but how they assume other
| investors will act. This can lead to counterintuitive and self-
| fulfilling group think behavior where the metrics might drive
| the stock price because of an incorrect perception that others
| value that metric, regardless of actual sentiment.
| downrightmike wrote:
| They've been promoting MBAs to leadership for years, it lead to
| the down turn and apparently they've figured out a new
| financial gimmick.
| rossdavidh wrote:
| Taking devil's advocate position here:
|
| 1) dividend was not (any longer?) rational, since they needed
| to reinvest in production process improvements; this is
| therefore a good CEO decision, which gives confidence to stock
| owners that CEO can do what needs to be done
|
| 2) "five nodes in four years", i.e. acceleration to catch up in
| process capability, is said to be on track, which (if actually
| true) is good news
|
| 3) this was the "pain for future gain" part of Gelsinger's
| turnaround plan, so if they can actually make a profit even
| during this phase, that is good news
|
| Not sure if I believe any of this, but that's my take on why it
| might be reason to buy the stock. Not that I am, in fact,
| actually buying the stock.
| atomicnumber3 wrote:
| The market is weird.
|
| It might have jumped because the market was pricing in a faster
| decline and it beat expectations, causing a correction.
|
| It could also be because earnings reports are times of higher
| volatility for a stock, and people will use derivatives to make
| certain bets around it. And then the earnings results can cause
| them to take decisive action to exit those positions, which
| might not be happening in the spot market but the spot market
| can feel the ripple effects of big movements in derivatives.
|
| Or maybe a bunch of meme investors are buying intel because it
| had good news and there's nothing more sophisticated than that.
|
| The market is weird, and it's especially weird on short time
| scales. Let's wait a week and see where they land.
| [deleted]
| nashashmi wrote:
| So every sale went down? And the stock still went up because
| profits went up?
| gnicholas wrote:
| Likely the lower sales were already priced into the stock
| price, and it was the stronger-than-expected forecast that
| caused the stock bump.
| LordShredda wrote:
| Imagine being down 15% YoY and STILL making 12.9 billion
| HDThoreaun wrote:
| Intel made money this quarter, but only because of a $2 billion
| dollar tax rebate. Without that they're still losing money.
| sixhobbits wrote:
| Is this an accounting trick to look profitable or is it normal
| and reasonable?
|
| > Effective January 2023, Intel increased the estimated useful
| life of certain production machinery and equipment from five
| years to eight years. When compared to the estimated useful life
| in place as of the end of 2022, Intel expects total depreciation
| expense in 2023 to be reduced by $4.2 billion. Intel expects this
| change will result in an approximately $2.5 billion increase to
| gross margin, a $400 million decrease in R&D expenses and a $1.3
| billion decrease in ending inventory values.
| tw04 wrote:
| >Is this an accounting trick to look profitable or is it normal
| and reasonable?
|
| It seems normal and reasonable to me with their change in
| direction to making chips for others. Previously Intel (for the
| most part) needed to rapidly depreciate hardware and move to
| the next process node to stay competitive. Now they can
| continue running a process node far beyond what they would have
| historically to create a cheaper chip-line for third parties.
| greenknight wrote:
| They have been talking about being a foundary for external
| use for a while, years... yet i have not heard of a single
| customer yet, just an announcement today that intel and
| ericsson have a partnership.
|
| It feels like yes they want to become a external foundary,
| but they just havent fully committed to that task yet.
| kccqzy wrote:
| It is both normal and reasonable and an accounting trick. The
| entire concept of depreciation is an accounting trick. Albeit a
| useful trick if you ask me.
|
| Look at cash flows if you don't like accounting tricks.
| marricks wrote:
| Could be a benefit from being stuck on the same node for longer
| stefan_ wrote:
| Interesting that this is allowed under GAAP.
| drumhead wrote:
| To make profits look better. It's why analysts tend to build
| Thier own p&l from the accounts and focus on the free cash flow
| instead.
| irrational wrote:
| How much of this is due to salary cuts, benefits/bonus cuts,
| and layoffs? I live in an area with a lot of Intel campuses and
| I know a ton of people that were laid off, had their salary
| cut, no bonuses, etc.
| qwerty3344 wrote:
| fwiw Google did the same trick with their servers
| metaphor wrote:
| Likewise Nvidia...buried in supplemental CFO commentary[1]
| circa FY23 Q4:
|
| > _Starting in fiscal 2024, we are extending the useful lives
| of a majority of our servers, storage, and network equipment
| from three years to a range of four to five years, and
| assembly and test equipment from five to seven years. As a
| result, we expect favorable impact to operating income of
| approximately $26 million in the first quarter and $133
| million in fiscal 2024 from a reduction in depreciation
| expense based on equipment balances as of January 29, 2023.
| The favorable impact will be primarily in operating expense,
| and to a lesser extent in cost of goods sold._
|
| [1] https://www.sec.gov/Archives/edgar/data/1045810/000104581
| 023...
| bratao wrote:
| I've always been a fan of AMD, but I must admit, Intel is making
| some impressive strides in the Machine Learning field, especially
| with tools like OpenVINO. The process of converting models to
| ONNX and running them in an accelerated manner on Intel GPUs has
| become significantly easier compared to using ROCm.
|
| If Intel continues on this trajectory, it wouldn't be a shocker
| to see them leapfrog AMD and give NVIDIA a run for their money.
| synergy20 wrote:
| what does openvino run on that is accessible to normal
| developers? amd has GPU cards for me to use and mi250 mi300 for
| data centers Nvidia has more of those.
|
| I'd like to have hardware to play with oneapi,openvino,but do
| not know where the hardware is
| mepian wrote:
| Any Intel Arc GPU will run it, as far as I know. I bought an
| A750 for myself to experiment with Level Zero/SPIR-V and
| SYCL.
| synergy20 wrote:
| thanks,will buy one
| selectodude wrote:
| It'll use the built in GPUs on any newer intel CPU.
| Otherwise, Arc.
| bogota wrote:
| In the last year we made a 180 from growth at all costs to
| profit at all costs. Would be crazy if the market just valued
| consistent sustainable growth but im sure some economist would
| tell me this is stupid
| 2OEH8eoCRo0 wrote:
| I wish they'd let me buy an Arc A310.
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