Intel shares climbs as statement delivers optimistic 2015 outlook

Shares at Intel jumped to their highest level in almost 14 years after the world's largest chipmaker gave an optimistic forecast for 2015 yesterday.

Sales are expected to benefit as the company pushes into markets outside personal computers. Revenue next year will increase by a percentage in the "mid-single digits", and gross margin will be about 62 per cent, the California based company said in a statement.

Analysts were projecting sales growth of 3 per cent. The company is to raise its annual dividend by 6.7 per cent to 96 cents a share.

Under chief executive Brian Krzanich, Intel has benefited from steady corporate PC demand as well as growing sales of chips for servers - machines that crunch corporate data and supply information to the Internet - where it dominates with 98 per cent of the market.

"After two years of decline, we're growing again," chief financial officer Stacy Smith said.

“2014 is turning out to be a better year than we thought.”

Analysts on average estimate revenue this year will rise 6 per cent, after sales slipped over the past two years. For 2015, analysts had projected Intel would post sales of $57.8 billion, a gain of 3 per cent, with gross margin of 62.5 per cent, according to data compiled by Bloomberg.

The company’s shares rose 4.7 per cent to $35.95, the highest closing price since February 2001, in New York.

The stock has gained 39 per cent this year. While corporate replacement of aging office equipment has helped slow the decline of the PC market, unit sales are still on course to shrink for a third consecutive year, as consumers increasingly turn to smartphones and away from laptops.

The boost that corporate PC purchases contributed to processor demand in 2014 is expected to tail off next year.

Intel is still struggling to replicate its strength in computer chips in the market for phones and other mobile devices.

While the company today said it’s on course to meet its goal of shipping more than 40 million tablet processors this year, that target has come at a cost. The chipmaker has been paying device makers subsidies to use parts that are too expensive for mainstream tablets.

Those payments resulted in an operating loss in the mobile unit of $1.04 billion in the third quarter, following a loss of more than a billion dollars in the previous period.

Revenue in the mobile and communications group dropped to $1 million in the third quarter from $353 million a year earlier.

“It’s a very large loss. It’s not something that makes us proud,” Mr Smith said.

- Bloomberg