Intel Projects Sales Growth on Data Centers and PC Demand

Intel predicted first-quarter sales that will meet analysts’ estimates on improvements in the personal computer market and continued growth in orders from data center owners, according to Bloomberg. Revenue will be $14.8 billion, plus or minus $500 million, the company said in a statement. Analysts had projected $14.5 billion.

CEO Brian Krzanich said he’s making progress in trying to generate revenue from more diverse sources such as cars and mobile phones while lessening the chipmaker’s reliance on a shrinking PC business. The results showed that Intel has carved out more sales in some areas, but profit is still tied to demand for processors running server computers in giant data centers.

Intel reported 8 percent revenue growth to $4.67 billion in its data center unit, a slower increase than the company’s long-term target. The company’s client computing group, which sells PC chips, gained 4.3 percent to $9.13 billion in the fourth quarter. For the year, the company is predicting that PC shipments will decline in the mid-single-digit percent range. That’s better than prior years, but worse than market forecasters are projecting.

Fourth-quarter net income was $3.6 billion, or 73 cents a share, compared with $3.6 billion, or 74 cents, a year earlier. Revenue rose 10 percent to $16.4 billion. Profit, excluding certain items, was 79 cents a share. Analysts, on average, had predicted a profit of 75 cents a share on sales of $15.8 billion. Adjusted gross margin, or the percentage of sales left after subtracting production costs, narrowed to 63.1 percent from 64.8 percent a year earlier, Intel said. That measure of profitability will be 63 percent, plus or minus “a couple of percentage points,” in the current quarter, Intel said.

Intel predicted that 2017 annual revenue will be unchanged from 2016. The forecast includes the divestiture of its Intel Security Group announced last year. Analysts had estimated a revenue increase of 4 percent for the year. The company plans to boost spending in 2017 on new plants and equipment to about $12 billion, an increase of about $2 billion from last year. The company is expanding its production of new memory chip technology.

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