Intel's Lingering Reliance on PCs Keeps Sales Growth Subdued

Intel's Lingering Reliance on PCs Keeps Sales Growth Subdued
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Intel’s push into new products is helping bolster sales and earnings in the second half of the year, even as the chipmaker’s dependence on the lackluster personal-computer and server markets is keeping growth in check, according to Bloomberg.

Revenue and profit were stronger than analysts estimated in the third quarter, and sales in the current period will be about $16.3 billion, the company said. While that’s ahead of projections, it would still leave revenue little changed from the same period a year earlier, underscoring how difficult it is for the world’s biggest chipmaker to expand total sales while its largest business stagnates.

Gross margin will be about 63 percent in the fourth quarter. That prediction and the sales forecast, which includes a range of plus or minus $500 million, compare with average analysts’ estimates for $16.1 billion in revenue and margin of 62.9 percent.

Third-quarter results got a lift from robust growth in Intel’s memory-chip and internet of things units. Net income rose to $4.5 billion, or 94 cents a share, from $3.4 billion, or 69 cents, in the same period a year earlier.

Sales climbed 2 percent to $16.1 billion. Excluding certain items, profit was $1.01 a share. On that basis, analysts had projected 80 cents in profit on revenue of $15.7 billion. Intel’s PC chip unit had sales of $8.9 billion, flat from a year earlier. In PCs, Intel is facing a revived challenge from longtime rival AMD.

The company’s data-center unit had revenue of $4.9 billion, an increase of 7 percent. Its performance is increasingly dependent on orders from cloud companies such as Google, Microsoft and Amazon’s web services unit. Within that division, sales from data-center operators were up 24 percent in the quarter, helping making up for a 6 percent decline in revenue from corporations, the company said.

Two of Intel’s newer businesses, memory and internet of things, registered sales growth of 37 percent and 23 percent, respectively. Still, the impact of that growth was limited because those divisions are each only about a 10th the size of the PC-chip business.