Intel’s profits in first quarter rise near 45%
Surge comes on back of stabilising PC market and strong data centre business
Intel still gets most of its revenue from selling PC chips, a business that returned to growth in 2016
Intel, the world’s largest chipmaker, reported a near 45 per cent rise in first-quarter profit, helped by strength in its data centre business and a stabilising personal computer market.
The company’s net income rose to $2.96 billion, or 61 cent per share, in the quarter ended April 1st from $2.05 billion, or 42 cent per share, a year earlier. Revenue rose to $14.80 billion from $13.70 billion.
The data business is crucial to Intel’s move to switch focus from the personal computer market towards making chips for data centres and Internet connected devices. While revenue at the data centre business is growing, Intel has warned that margins could be hit by higher costs, including those to update the business’ manufacturing process.
But Intel still gets most of its revenue from selling PC chips, a business that returned to growth in 2016 due to stabilising demand in the second half of the year. Revenue from client computing, as Intel calls the business, rose 6 per cent to $8 billion. Analysts were expecting revenue of $7.95 billion, according to FactSet StreetAccount. Worldwide PC shipments grew marginally in the quarter, well ahead of an expected decline of 1.8 percent, according to research firm IDC.
To further reduce its dependence on the PC market, Intel said last month it would buy autonomous vehicle technology firm Mobileye NV, thrusting itself into the forefront of the fast-growing market to develop driverless systems. Until it struck the deal, Santa Clara-based Intel’s presence in the market was through investments in at least half a dozen start-up companies developing different components for self-driving systems.
Excluding items, Intel earned 66 cent per share. Analysts were expecting a profit of 65 cent.
Revenue rose to $14.80 billion from $13.70 billion, but fell marginally short of analysts’ average estimate of $14.81 billion.
The company said it expected second-quarter revenue of $14.4 billion, plus or minus $500 million. Analysts on average were expecting revenue of $14.34 billion.
Up to Thursday’s close, shares of Intel had risen 3 per cent this year, underperforming the roughly 6.7 per cent gain in the broader S&P 500 index. – Reuters