Intel Sales Beat Analyst Estimates

Intel posted second-quarter sales and profit that topped analyst projections and gave an upbeat third-quarter forecast, according to Bloomberg.

Separately, the company said it agreed to sell the majority of its smartphone-chip business to Apple. A deal, valued at $1 billion, is completing the wind-down of a multibillion-dollar, decades-long effort to break into the mobile industry. Intel shares jumped as much as 8%.

Revenue is getting a boost from rising personal-computer demand, which is still outrunning supply, CFO George Davis said. Purchases of higher-priced server chips and demand from new markets outside of computing are also bolstering sales. Some of the added PC-chip demand is coming from customers anticipating future tariffs related to the China-U.S. trade dispute, and that demand can’t be expected to continue at the same level, he said.

Second-quarter sales were $16.5 billion, the company said in a statement. Analysts on average had predicted $15.7 billion. Net income was $4.2 billion, or 92 cents a share, compared with estimates for 85 cents. Gross margin, or the percentage of sales remaining after deducting the cost of production, was 59.8% in the quarter. Intel’s target range for the metric, a key indicator of efficiency for a manufacturing company, is above 60%.

Intel’s Xeon processors account for more than 95% of the market for chips that run servers, the machines that provide the backbone of the internet and corporate networks. In the second quarter, the data-center division posted revenue of $5 billion, a decline of 10%. Sales in the PC chip business climbed 1% to $8.8 billion.

Revenue in the current period will be about $18 billion, and net income will be about $1.16 a share, Intel said. That compares with average analysts’ estimates of $17.9 billion and $1.13 a share. For the year, Intel is now predicting revenue of about $69.5 billion and earnings per share of $4.10.

The company said newer businesses, chips for connected cars and machinery, helped fuel the better-than-predicted performance in the recent period. The company’s Mobileye self-driving car technology unit had sales of $201 million, up 16% from a year earlier. Internet of things revenue rose 12% to $986 million.

Though the number topped estimates, second-quarter revenue was down 2.7% from a year earlier, representing the first quarterly drop in four years. In last year’s second quarter, Intel posted sales of $17 billion and earnings of $5 billion, or $1.05 a share.