Intel Grows Profit As PC Recovery Continues

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Slowing demand for tablet devices and a healthy PC market help Intel’s growing financial strength

Intel’s management team has reason to feel pleased after the giant chipmaker posted a third quarter of encouraging financial performance.

The Santa Clara, California-based company reported a 12 percent rise in profits, and a eight percent rise in sales.

PC Recovery

For the third quarter ending 27 September 2014, Intel posted a net profit of $3.32bn (£2bn), up 12 percent from $2.95bn (£1.85bn) in the same year-ago quarter.

This means that it is now the third consecutive quarter where the company has benefited from the hardware refresh prompted by migration away from Windows XP.

There was equally good news on the revenue side, as sales rose 8 percent to $14.5bn (£9.1bn), from $13.5bn (£8.5bn) a year previously. This was was above Wall Street expectations of sales of $14.4bn (£9.1bn), according to a survey conducted by Thomson Reuters

krzanich_keynote01“We are pleased by the progress the company is making,” said Intel CEO Brian Krzanich. “We achieved our best-ever revenue and strong profits in the third quarter.

“There is more to do, but our results give us confidence that we’re successfully executing to our strategy of extending our products across a broad range of exciting new markets,” said Krzanich.

A quick breakdown of Intel’s results saw strong performance at most of its divisions, as it shipped a record quarterly number of chips for PCs, servers, tablets, phones and Internet of Things.

Indeed, Intel said it was the first time it has shipped more than 100 million microprocessors in a quarter.

Intel’s PC Client Group, the division that has struggled the most with the PC market downturn, posted revenues of $9.2bn (£5.8bn), up 6 percent sequentially and up 9 percent year-over-year. The Data Center Group posted revenue of $3.7bn (£2.3bn), up 5 percent sequentially and up 16 percent year-over-year.

The Software and services operating segments posted revenues of $558m (£350m), up 2 percent sequentially and up 2 percent year-over-year. The Internet of Things Group saw revenue rise 14 percent year-on-year to $530m (£333m).

There was less good news on the mobile side, where Intel is still struggling against chipmakers who base their processors on designs from ARM Holdings The Mobile and Communications Group posted revenue of just $1m (£630,000), which Intel said was “consistent with expectations.”

Tablet Slowdown

Looking forward, Intel said it expects to make sales of approximately $14.7bn (£9.2bn) in the fourth quarter.

Earlier this year, analyst houses had been predicted a gloomy outlook for the PC industry, but the sector has bounced back in recent quarters.

Another issue that could be helping Intel is the slowing tablet market, which was seen as an alternative to the humble PC. The tablet market seems to have levelled off, and Gartner recently warned that global sales of tablet devices are set to see a significant slowdown this year, as consumers increasingly keep faith with their existing units.

Gartner predicted that sales of tablets worldwide during 2014 will be just 229m units, down 11 percent from the previous forecast, and meaning that tablets will make up less than ten percent of all devices sold this year.

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Author: Tom Jowitt
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