Intel boosted by surprise rise in PC demand, though forecast not pretty

19 Oct 20167 Shares

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Intel. Image: Toni Genes/Shutterstock

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A rise in data centre business, PC operations and overall net income impressed for Intel in Q3, but its forecast isn’t pleasing many.

Intel’s Q3 results were revealed yesterday and came in above analyst predictions, thanks in part to a surprising rise in the company’s PC business. It rose by by 4.5pc year-on-year to $8.89bn, with the company’s data centre business up 9.7pc to $4.54bn.

Though despite the impressive figures, and a rise in net income from $3.11bn to $3.38bn, it was Intel’s forecast that most interested investors – and the outlook doesn’t impress many.

Intel

Projecting $15.7bn in revenues for Q4 (down on analyst estimates which were around $15.86bn), shares were down following the announcement of the news.

“This is below the average seasonal increase for the fourth quarter as we expect the worldwide PC supply chain to reduce their inventory,” said Stacy Smith, Intel’s executive VP.

The supply and demand of PCs, on which Intel relies so much, is in a worrying era for the company. Despite the surprise raising of its Q3 forecast last month, PC sales are looking increasingly unreliable.

According to recent figures from Gartner, the desktop computer is already fading from view. A two-year period of solid decline was recently underlined by an almost 12pc total fall in Lenovo, HP, Dell, Asus, Apple, Acer and all other manufacturers’ sales in the past year.

HP, Dell and Asus actually had marginal gains but, beyond the major operators, the drop was so dramatic that the entire industry was dragged down.

Given that over half of Intel’s revenues come from its PC business, this is clearly an ongoing concern – though its cloud operations may point towards some positivity.

Revenue growth from this unit for the full year will likely be in the high single digits, Brian Krzanich, Intel’s CEO, said on the call with Reuters.

Demand for cloud-based services has been growing as more businesses shift to cloud-computing methods.

“It was an outstanding quarter, and we set a number of new records across the business,” said Krzanich.

“In addition to strong financials, we delivered exciting new technologies while continuing to align our people and products to our strategy.

“We’re executing well, and these results show Intel’s continuing transformation to a company that powers the cloud and billions of smart, connected devices.”

Intel. Image: Toni Genes/Shutterstock

Gordon Hunt is a journalist at Siliconrepublic.com

editorial@siliconrepublic.com