KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Intel Corp has announced significant changes as it faces financial difficulties and competition in the rapidly growing AI market. The company revealed plans to cut over 15,000 jobs and suspended dividend payments, alongside a disappointing revenue forecast for the third quarter. This announcement comes amid a decline in Intel’s business, with shares dropping over 18% in late trading following the news.
Key Financial Projections and Results
Third-Quarter Revenue Forecast: Intel expects sales to be between US$12.5 billion (RM56.96 billion) and US$13.5 billion, falling short of analyst expectations of US$14.38 billion.
Expected Loss: The company predicts a loss of three cents per share, excluding certain items, against expectations of a profit of 30 cents per share.
Second-Quarter Results: Intel reported a profit of two cents per share, excluding certain items, on revenue of US$12.8 billion, slightly below analyst estimates of US$12.95 billion.
Revenue Decline: Overall sales are projected to show a modest increase this year compared to 2024, leaving the company more than US$20 billion below its peak in 2021.
Strategic Changes and Challenges
Job Cuts: Intel plans to reduce its workforce by over 15% from its current headcount of approximately 110,000 employees. This decision is aimed at reducing costs and improving operational efficiency.
Dividend Suspension: Dividend payments will be suspended starting in the fourth quarter, with plans to resume once cash flows improve.
Spending Reductions: Intel is cutting its spending on new plants and equipment by more than 20% in 2024, with a budget of US$25 billion to US$27 billion. Next year's expenses are expected to be between US$20 billion and US$23 billion.
Competitive Pressures: Intel has lost significant market share to competitors such as Nvidia Corp, which now boasts more than twice Intel's quarterly sales, and Advanced Micro Devices Inc (AMD), valued over US$100 billion higher by investors.
AI Market Challenges: The rise of artificial intelligence has shifted market dynamics, with Nvidia leading in AI-focused accelerator chips. Intel's traditional processors are seeing reduced demand as AI technology becomes more central to computing.
Leadership and Long-Term Vision
CEO Pat Gelsinger’s Statement: Gelsinger acknowledged the difficulties ahead, describing the measures as “some of the most consequential changes in our company’s history.” He emphasized the need for bold actions to address financial challenges and align with long-term strategic goals.
CFO Dave Zinsner’s Remarks: Zinsner highlighted the necessity of job cuts to create a more sustainable business model, noting that revenue and financial performance are not where they need to be.
Manufacturing and Future Plans: Gelsinger remains optimistic about Intel’s manufacturing capabilities, stating that ongoing upgrades and new plant constructions will eventually position Intel to compete effectively with its rivals. The company is focused on attracting outside customers to its manufacturing operations.
Impact of Geopolitical Factors
China's Huawei Ban: In May, Intel revised its sales expectations after the US government revoked its license to supply chips to China’s Huawei Technologies Co due to national security concerns.
Restructuring Efforts: The company is reporting earnings under a new business structure that highlights its manufacturing operations. This restructuring aims to enhance efficiency and competitiveness.
Performance of Business Units
Foundry Unit: Revenue improved by 4% from the previous year to US$4.32 billion.
PC Chips: Posted growth of 9% compared to the same period last year.
Data Center Unit: Experienced a 3% decline in sales to US$3 billion, failing to capture the AI market share dominated by Nvidia.
Conclusion
Intel's recent announcements highlight the challenges it faces in adapting to a rapidly changing technology landscape. The company's strategic measures, including significant job cuts and financial adjustments, reflect its efforts to regain competitiveness and ensure long-term growth. As Intel navigates these transitions, its ability to innovate and respond to market demands will be critical in shaping its future trajectory.
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