Intel, one of the world's leading chipmakers, has recently announced its worse-than-expected quarterly results and issued a subdued quarterly guidance. The company plans to address these challenges by implementing significant cost-cutting measures, including a reduction of 15% in its headcount, which currently stands at over 125,000 employees.

Following the news, Intel's shares plummeted by as much as 13% in extended trading on Thursday. The chipmaker's underwhelming performance, coupled with the announcement of employee layoffs as part of a $10 billion cost-reduction plan, seemed to have caught analysts off guard.

The numbers tell the story of Intel's struggles in the fiscal second quarter, which ended on June 29. The company reported a 1% decline in revenue compared to the same period last year, totaling $12.83 billion. Consequently, Intel incurred a net loss of $1.61 billion, or 38 cents per share, in contrast to the net income of $1.47 billion, or 35 cents per share, it achieved in the year-ago quarter.

Within its segments, Intel's Client Computing Group, responsible for PC chips, witnessed a 9% increase in revenue, generating $7.41 billion in the quarter. Meanwhile, the Data Center and AI unit experienced a 3% decline, with revenue amounting to $3.05 billion, falling short of the $3.14 billion consensus among analysts.

Despite the gloomy results, Intel highlighted that its PC chips capable of handling artificial intelligence workloads outperformed internal expectations. These chips are projected to reach over 40 million units shipped by 2024.

Looking ahead to the fiscal third quarter, Intel forecasts an adjusted net loss of 3 cents per share, with revenues expected to range between $12.5 billion and $13.5 billion. However, analysts surveyed by LSEG estimated adjusted net earnings at 31 cents per share and revenue of $14.35 billion, indicating a substantial discrepancy.

To compound its challenges, Intel also announced that it would not pay its dividend in the fiscal fourth quarter of 2024. These measures are part of Intel's broader cost-cutting strategy, with expected cuts of approximately $20 billion this year, $17.5 billion in 2025, and additional reductions in 2026.

The disappointing results have taken a toll on Intel's stock value, which has already declined by 42% this year. In contrast, the S&P 500 index has seen gains of almost 14% during the same period.

Intel's executives will be discussing the company's results with analysts in a conference call scheduled to begin at 5 p.m. ET.

As Intel navigates the challenging landscape, investors and industry stakeholders will closely monitor the potentially transformative initiatives undertaken by the chipmaker to regain its competitive edge in an ever-evolving tech market.

Please note that this is a developing story, and updates will be provided as new information becomes available.

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