Intel earnings beat expectations. Shares higher in premarket

One of the largest manufacturers of cutting-edge chips and integrated circuits, Intel (INTC.US) positively surprised analysts with its Q3 report. Markets had been awaiting the company's report to gauge the 'losses' communicated by chipmakers in the wave of U.S. export sanctions to China and slowing demand for devices. Shares gained 6% before the open:

Earnings per share (EPS): $0.59 vs. $0.32 forecast (Refinitiv)

Revenue: $15.34 billion vs. $15.25 billion forecast (Refinitiv) and $15.32 billion in Q2.

PC chip production (Client Computing): $8.12 billion vs. $7.58 billion estimates (Street Account) 

• Intel lowered its annual earnings forecast as expected, but the market expected it so the news did not disappoint. The company expects $1.95 earnings per share and $63 billion to $64 billion in revenue vs. from $2.3 earnings per share and $65 billion to $68 billion in revenue three months ago. So we can see that Intel expects revenue to decline at a rate close to 20% year-over-year. So far, the company's profits are down 59% year-on-year, with sales down 20%;
• Total revenues are down 15% on a quarterly basis. Revenues fell 22% in the previous quarter, net income was $1.02 billion compared to a $434 billion loss in Q2. Intel CEO Pat Gelsinger on a conference call with analysts indicated that he expects continued economic uncertainty through 2023. In contrast, CFO David Zinsner stressed that a global recession is possible. 
• The company is aiming to reduce costs by $10 billion by 2025 through efficiency improvements, which bulls have taken positively. The company's short-term target is $3 billion in cost reductions as early as 2023. The company also expects to lay off employees, according to Bloomberg reports.
• The market expected a sharper decline in chip revenue. Demand for devices and computers has been strong in 2020 and 2021 amid global trends of remote work, learning and gaming during the pandemic. On the other hand, the Datacenter/AI segment provided Intel with $4.21 billion in revenue against StreetAccount analysts' $4.67 billion estimate (down 27% y/y), the reason for the decline included the slowdown in China. The Network and Edge products sector gave the company revenue of $2.27 billion against Street Account's estimate of $2.40 billion.
• The results showed signs of a slowdown, including in growth segments like databases, although the market focused its attention primarily on chip demand, here it 'exaggerated' the scale of the forecast decline. The company reported that device makers had reduced inventories, and the decline in PC demand was seen primarily in the retail and education segments. 
• One of Taiwan's leading semiconductor manufacturers, MediaTek will continue to rely on Intel Foundry Services for chip production. Intel has also begun construction of a manufacturing plant in Ohio supporting domestic production of strategic semiconductors, the scale of the investment exceeds $20 billion. The U.S. Congress is likely to support the relocation of chip production to the U.S., although the 'Chips and Science ACT' bill has drawn criticism from some Republicans. 

Intel (INTC.US) stock chart, H4 interval. The stock is repsecting key resistance, which runs at the SMA200. With the opening indicating levels near $28, the share price is likely to rebound for the first time since July from support at the 50-session moving average, which runs at yesterday's closing price of $26.3. Source: xStation5