Intel shares drop, but the firm forecasts better growth for its data center group to 2019
Intel Corp today cut revenue growth forecasts for its data center group. Shares in the world’s biggest chipmaker’s shares dropped as much as 3.8 percent.
Intel had precited strong growth for its data center group to offset declining demand for its personal computer chips, until recently its biggest income stream. Having generated $14.39 billion in revenue and $7.3bn in operating income in 2014 Intel has said that it intends to grow the data center group’s revenue at 15 percent compounded annual growth rate through 2018. This would make the data center group Intel’s biggest revenue generator, with an income of $25bn in 2019.
In reality, the business, has grown 19.2 percent in the first quarter of 2015, 9.7 percent in the second and 12 percent in the latest quarter.
Intel CEO Brian Krzanich
Intel not re-thinking long-term growth
The company was not “rethinking the long-term growth” of the business, chief executive Brian Krzanich said on a post-earnings conference call.
“It’s a combination of two things — data center weakness and units — it looks like their units are still pretty weak, they are seeing upside from pricing,” analyst Stacy Rasgon of Bernstein said.
This weeks’ relatively poor data center forecast took the shine away from the company’s better-than-expected profit and revenue in the third quarter.
The company also trimmed its 2015 capital expenditure for the third time to $7.3 billion, plus or minus $500 million. Intel had previously forecast capital expenditure of $7.7 billion, plus or minus $500 million.
The company said it expected fourth-quarter revenue of $14.8 billion, plus or minus $500 million. The midpoint of the range is a marginal increase from a year earlier.
Intel’s net income fell to $3.11 billion, or 64 cents per share, from $3.32 billion, or 66 cents per share, a year earlier.
Net revenue declined to $14.47 billion from $14.55 billion, but beat analysts’ estimate of $14.22 billion.