Intel 1Q25: work in progress, more unknowns than clarity
The stock is expensive at 18x 2026 EPS. Too many unknowns.
1Q better than guided, 2Q a bit better but let’s ignore that, margins and net income remain very low. Reiteration that 1Q25 is the trough. Mngt mentions concerns about “the macro” and “tariffs”.
New CEO emphasizes that it “won’t be easy” to fix Intel, products, manufacturing, culture, internal org. A re-org is coming but no details yet. Lower Opex but “we have not yet identified what that means for headcount”
Consensus continues to expect a swift runaround into 2026. But based on this optimistic forecast, the stock trades at 18x 2026 EPS. Too many unknowns.
New CEO, New Re-org – but Intel won’t say what or how much it costs for now
“Intel is taking actions to drive better, more efficient execution across the business:
Streamlining the organization, eliminating management layers, enabling faster decision-making
Intel expects to have restructuring charges associated with these actions, some of which may be included in its non-GAAP results. Since the company has not yet estimated these charges, they are not included in its guidance”
Reduce non-GAAP operating expense target to approximately $17 billion in 2025, down from its previously stated goal of $17.5 billion, and is now targeting $16 billion in 2026.
Reduce gross Capex target to $18 billion for 2025, down from the company's previous target of $20 billion, while still expecting net capital expenditures of approximately $8 billion to $11 billion.
New CEO Mr. Tan is painting a bleak picture with multiple challenges:
“It won’t be easy. Bad execution. No quick fix here”
“We need to fundamentally change our culture. Bureaucracy is suffocating innovation”
“There are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth”
“I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. Flatten Product teams, away from 3-4 layers to direct report”
“Re-think factory footprint”
The KPI list of new CEO Mr. Lip Bu TAN is beautiful:
But peak revenue and margins were in 2020-21, followed by 3-4 years of steady decline. How long will it take? US$m, GAAP below
