SANTA CLARA, Calif. – Intel Corp. impressed analysts with its first-quarter results despite issuing disappointing guidance and announcing plans for major cost-cutting measures. The tech giant reported earnings that beat estimates, with adjusted earnings per share of 13 cents compared to the 1 cent estimated by analysts. Revenue also outperformed expectations, coming in at $12.67 billion versus the projected $12.3 billion.

In a move to streamline operations, Intel revealed its intention to reduce both operational and capital expenses in the coming year under the leadership of CEO Lip-Bu Tan. The company predicted revenue of $11.8 billion for the current quarter, lower than the average analyst estimate of $12.82 billion. Additionally, Intel projected breakeven earnings for the quarter, disappointing analysts who were anticipating a profit of 6 cents per share.

The second-quarter guidance provided by Intel reflected uncertainties arising from the current macroeconomic environment. The company reported a net loss of $800 million, or 19 cents per share, for the first quarter due to increased sales costs and writedowns, a stark contrast to last year’s profit of $2.7 billion or 63 cents per share.

This marked Intel’s first earnings report under CEO Lip-Bu Tan, who succeeded Pat Gelsinger in March. Gelsinger’s departure followed pressure from board members and investors, as the company struggled to compete effectively in artificial intelligence and expand into semiconductor manufacturing for other companies. CEO Tan acknowledged the challenges ahead, emphasizing the need for sustained growth and market share gains.

As part of its cost-cutting strategy, Intel announced plans to reduce operational and capital expenses, streamline management layers, and enhance efficiency. CFO David Zinsner confirmed that workforce reduction, particularly among managers, was inevitable. CEO Tan highlighted the importance of these changes in a memo published on the company’s website, stating that the restructuring process would commence in the current quarter.

Investors are closely watching Tan’s leadership, hoping for a turnaround from Intel’s declining market share in its core processor business. The company faces stiff competition in the AI sector, lacking a competitive chip comparable to industry leader Nvidia. Tan has begun assembling his team, appointing networking chief Sachin Katti as Intel’s chief technology officer and head of AI. In a recent announcement, Tan revealed plans for employees to work four days in the office per week starting in September.

Intel’s financial report highlighted a positive performance by its data center group, which reported $4.1 billion in sales, up 8% from the previous year. The company’s Client Computing Group, responsible for PC chips, experienced an 8% decline in sales, totaling $7.6 billion. Intel’s foundry business saw $4.7 billion in revenue, primarily from internal chip manufacturing for its other divisions.

Overall, Intel’s focus on cost reduction and operational efficiency underscores its commitment to regaining market competitiveness and driving sustainable growth under new leadership. Investors await further developments as CEO Lip-Bu Tan navigates the company through its strategic transformation.