UPDATED 21:24 EDT / OCTOBER 26 2017

INFRA

Intel delivers blowout earnings on back of data center growth

Intel Corp. delivered third-quarter earnings that blew past analysts expectations, prompting Chief Executive Officer Brian Krzanich to crow that the chipmaking giant’s product lineup is the strongest it has ever been.

Krzanich’s comments came as Intel delivered record third-quarter earnings that show the company’s renewed focus on areas such as programmable devices, non-volatile memory chips, the “Internet of Things” and data centers is paying off.

Intel said its revenues were $16.15 billion before certain costs such as stock compensation, ahead of a Thomson Reuters poll that forecast $15.73 billion in revenue. Earnings per share came in at $1.01, way higher than Wall Street’s 80 cents-per-share forecast. Net income for the quarter totaled $4.52 billion, up 34 percent from the same period a year ago.

“We executed well in the third quarter with strong results across the business, and we’re on track to a record year,” Krzanich said in a statement. “I’m excited about our progress and our future. Intel’s product line-up is the strongest it has ever been with more innovation on the way for artificial intelligence, autonomous driving and more.”

In a conference call, Krzanich (pictured) reiterated that Intel is shifting away from its reliance on its client computing group, which makes microchips for personal computers. He said the company is becoming more of a data-centric business, with chips for data centers and emerging technologies such as self-driving cars.

“Our strategy is to be the driving force of the data revolution across technologies and industries,” he said. “Our data-centric businesses are the company’s growth engine.” At the same time, though, he added that “our PC business remains central to our success. It’s a source of great profit, cash flow, scale and intellectual property.”

Intel’s client computing group is still the biggest earner, generating $8.9 billion in revenue for the quarter. However its other businesses are where the growth is. While PCs stayed flat, the data center unit reaped $4.9 billion for the quarter, up 7 percent. Non-volatile memory revenue grew by 37 percent, programmable logic chips were up 10 percent, and IoT saw 23 percent growth.

“Intel had a blowout Q3, which shows how well the company is managing investing in the future while optimizing its current product lines,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. “Almost every single business unit was up, with flash leading the charge. Intel’s new ‘data-centric’ businesses were up 15 percent — good growth for new and very large businesses.”

The growth in Intel’s other business units is timely because the company is also facing increased competition in the PC market. The firm’s main rival there, Advanced Micro Devices Inc., is snapping at its heels with its new Ryzen chips that are said to be its most competitive in years and seem to be eating into Intel’s market share.

“It appears AMD’s Ryzen consumer desktop effect is kicking in, as Intel’s desktop volumes were down 6 percent,” Moorhead said.

Still, Intel doesn’t seem to be all that concerned about the threat from AMD. Indeed, the company raised its full-year revenue outlook by $700 million to $62 billion, with earnings per share expected to be in the $2.93 range, up 5 cents from its previous outlook.

Intel’s shares rose 2 percent in after-hours trading, having gained 14 percent this week prior to its earnings call. Update: In Friday morning trading, shares were up more than 7 percent.

Image: Intel Free Press/flickr

A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU