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Intel Reports Better Than Expected Quarterly Results as Data Centre Business Grows

Intel Reports Better-Than-Expected Quarterly Results as Data Centre Business Grows

By Reuters | Updated: 16 July 2015 11:40 IST

Intel Corp reported better-than-expected quarterly results on Wednesday as growth in its data centres and Internet-of-Things businesses helped offset weak demand for personal computers that use the company's chips.

Shares of the world's largest chipmaker, which also cut its full-year capital expenditure forecast for the second time, rose as much as 9.2 percent after market before paring some of their gains.

The company has been expanding its line-up of higher-margin chips used in data centres to counter slowing demand from the PC industry and agreed to buy Altera for $16.7 billion in April as part of these efforts.

Revenue from the data centre business, Intel's second-largest, grew 9.7 percent to $3.85 billion (roughly Rs. 24,448 crores) in the second quarter from a year earlier, helped by continued adoption of cloud services and demand for data analytics.

"We continue to forecast robust growth rates of the data centre group, Internet of Things group and NAND businesses, which we expect to mostly offset the PC decline," Chief Financial Officer Stacy Smith said on a post-earnings call.

Revenue from the PC business, Intel's largest, fell 13.5 percent to $7.54 billion (roughly Rs. 47,881 crores) in the quarter ended June 27.

"Our expectations are that the PC market is going to be weaker than previously expected," Smith said.

Research firm Gartner forecast global PC shipments to fall 4.5 percent to 300 million units in 2015, with no respite until at least 2016.

Intel forecast current-quarter revenue of $14.3 billion (roughly Rs. 90,810 crores), plus or minus $500 million. Analysts on average were expecting revenue of $14.08 billion (roughly Rs. 89,412 crores), according to Thomson Reuters I/B/E/S.

The company also cut its 2015 capex forecast to $7.7 billion (roughly Rs. 48,897 crores), plus or minus $500 million (roughly Rs. 3,175 crores). It had cut its full-year capex forecast to $8.7 billion (roughly Rs. 55,248 crores) from $10 billion (roughly Rs. 63,503 crores) in April.

Intel's continued focus on keeping spending down is probably the strongest positive in its quarterly report, Wedbush Securities analyst Betsy Van Hees said.

The company's net income fell to $2.71 billion (roughly Rs. 17,209 crores) from $2.8 billion (roughly Rs. 17,780 crores) a year earlier. Earnings per share, however, were flat at 55 cents as the number of outstanding shares fell.

Analysts had expected a profit of 50 cents per share.

Net revenue fell 4.6 percent to $13.19 billion (roughly Rs. 83,761 crores), but edged past the average analyst estimate of $13.04 billion (roughly Rs. 82,808 crores).

Up to Wednesday's close, Intel's stock had plunged about 18 percent this year, compared with an 2.9 percent fall in the Philadelphia Semiconductor Index.

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