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Earnings -Legacy tech giants

Investors were not impressed with the latest quarterly results from IBM (IBM) and Intel (INTC), as the two heavyweight stocks tumbled nearly 7% and 5%, respectively, after the bell on Thursday. Intel initially gained on a premature release of its earnings, but slumped after the company’s new CEO committed to in-house manufacturing. IBM meanwhile signaled its cloud bet will take longer to pay off and posted its fourth straight quarter of revenue declines.

Why did Intel publish results early? “We are investigating reports that non-authorized access may have been obtained to one graphic in our earnings material,” a spokesperson declared. “Earlier today, once we became aware of these reports, we made the decision to issue our earnings announcement a brief time before the originally scheduled release time.”

Outlook for Intel: The company has been grappling with the loss of leadership in producing ultrafast chips, ceding much of its market share to Taiwan Semiconductor Manufacturing (TSM) and Samsung Electronics (OTC:SSNLF), whose factory innovations allow computer chips to do more at a lower cost. Incoming chief executive Pat Gelsinger said yesterday that the “majority of our 2023 products will be manufactured internally,” countering growing calls from some investors to shed that part of its business. While Intel will “expand use of external foundries for certain technologies,” the company doubled down on retaking its position as the “unquestioned leader in process technology.”

Outlook for IBM: Challenges lay ahead for CEO Arvind Krishna, who took over during the pandemic, including how to revamp its business in the age of the cloud. Part of the steps Big Blue is taking involves spinning out its managed infrastructure services unit – a roughly $19B a year business – from IT infrastructure division GTS. IBM is focusing its investment on artificial intelligence and the hybrid cloud – betting that users will increasingly operate across multiple clouds, public and private.
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