On Thursday, Intel Corp (NASDAQ:INTC) executives detailed how the company plans to leverage its improved cash position and liquidity following major investments from the Donald Trump administration, Nvidia Corp (NASDAQ:NVDA), SoftBank Group (OTC:SFTBF) (OTC:SFTBY) and others.
Intel focuses first on reducing debt
During Intel’s third quarter earnings call, Executive VP and CFO David Zinsner explained that then CEO Lip Bu Tan joined the company, he was really “angry” about Intel’s balance sheet.
The company has already made progress, including reducing $4.3 billion in debt this quarter, with additional maturities due to be paid off in the near future.
Zinsner said, “When we think about this money, our first focus is on delivering debt,” adding, “When Lip-Bu came in, he was really upset about the balance sheet. So we’ve done a lot to work on that and improve that for him.”
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CapEx flexibility depends on customer demand
Intel approaches capital expenditures with caution, focusing on disciplined investments directly tied to customer demand.
“Lip-Bu has been very direct with us about this. He wants to see the whites of the customer’s eyes [so] that we can believe in that demand. And if that demand exists, we will of course increase CapEx as necessary,” Zinsner said.
Intel expects approximately $18 billion in gross capital expenditures through 2025, with total CapEx expected to exceed $27 billion – up from $17 billion in 2024.
OpEx investments aim for growth and shareholder returns
In terms of operating expenses, Intel plans to retain $16 billion in investments next year as Intel continuously evaluates how to deploy these resources to maximize growth and returns.
Zinsner added: “We want to be quite disciplined about our OpEx as a percentage of revenue and increase leverage. But we do see opportunities to make investments that, I think, could deliver great returns for shareholders, and we’re not afraid to do that either.”
Strategic investments support Intel’s future
These moves come as Intel benefits from a strengthened cash position following investments from the US government, Nvidia, SoftBank and others.
Intel reported third-quarter revenue of $13.65 billion, beating analysts’ expectations of $13.14 billion. The chipmaker posted an adjusted profit of 23 cents per share, well above the estimate of one cent per share.
Looking ahead, Intel expects fourth-quarter revenue between $12.8 billion and $13.8 billion, compared to analyst estimates of $13.37 billion.
The company expects fourth-quarter adjusted earnings of eight cents per share, in line with expectations.
INTC Price Action: Intel shares rose 7.71% in after-hours trading to reach $41.10 at the time of writing, according to Benzinga Pro.
Benzinga’s Edge Stock Rankings places Intel in the 90th percentile for Momentum, highlighting its strong long-term price performance. Click here to compare with colleagues.
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