INTC Intel Corporation

By Tess Stynes 

Intel Corp. said its second-quarter earnings fell sharply as the chip giant booked a hefty charge related to its efforts to restructure and cut costs.

In April, the company unveiled cost-cutting plans that aim to free up funds to invest in businesses that are growing. The restructuring includes plans to slash 12,000 jobs, or about 11% of Intel's workforce.

On Wednesday, Intel said it had cut 6,000 of those so far, and it booked $1.41 billion worth of restructuring and other charges during the quarter.

The Santa Clara, Calif., company's shares fell 2.7% to $34.71 in recent after-hours trading.

For the current quarter, Intel forecast revenue of $14.9 billion, plus or minus $500 million. Analysts polled by Thomson Reuters had expected revenue of $14.63 billion.

For 2016, the company maintained its revenue outlook for growth in the mid-single digits.

As the market for chip that power PC has waned, Intel has been transforming itself to focus on chips for servers and other gear related to cloud computing -- long the company's healthiest business -- along with chip sales for the Internet of Things.

For the three-month period ended July 2, the company's client computing revenue fell 2.6% to $7.34 billion as volume weakened by 15% but average selling prices strengthened by 13%.

Intel's data center revenue grew 4.5% to $4.03 billion. Volume improved by 5%, though selling prices dropped 1%.

In the Internet of Things group, sales improved 2.3% to $572 million.

With its acquisition of Altera Corp. late last year, Intel also has increased its presence in chips that can be programmed after they leave the factory. That business, the programmable solutions segment, generated sales of $465 million.

Chief Executive Brian Krzanich said in prepared remarks that second-quarter revenue met the company's expectations and profitability was better than it expected. Mr. Krzanich also said the company's restructuring effort was "solidly on-track."

Over all, Intel reported a profit of $1.33 billion, or 27 cents a share, down from $2.71 billion, or 55 cents a share, a year earlier. Excluding certain items, adjusted per-share earnings were 59 cents. Revenue increased 2.6% to $13.53 billion.

Analysts polled by Thomson Reuters expected per-share profit of 53 cents and revenue of $13.54 billion.

Gross margin fell to 58.9% from 62.5%.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

July 20, 2016 17:04 ET (21:04 GMT)

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