SAN FRANCISCO—Intel Corp. Thursday (Jan. 26) reported fourth quarter 2016 revenue and profit that beat analysts’ expectations on sales growth in computing, data center chips and Internet of Things (IoT) chips. The company also delivered a forecast for the first quarter that exceeded Wall Street’s expectations and announced it would increase its capital spending outlay for 2017.
Despite its surprising success with PC processors in the fourth quarter, Intel also tempered its upbeat first quarter forecast with caution. The company said it has a more cautious view of PC consumption trends than third-party market watchers, especially in emerging markets like Russia, China and Latin America. While Intel said it expects high single digit growth in sales to data centers, it is not expecting a sales uptick in the enterprise server or microprocessor segment
Brian Krzanich, Intel’s CEO, said in a conference call with analysts following the company’s quarterly report that Intel has a slightly more pessimistic view for the PC market than many industry observers. He said Intel expects PC unit shipments to decline by a mid-single digit percentage in the first quarter following a strong fourth quarter in which the company enjoyed strong sales for its core i7 microprocessors.
Brian Krzanich, Intel
“It’s starting to get better,” Krzanich said of the PC market. “But I don’t think we are back into zero unit or positive unit growth.”
Some analysts have said the PC market is starting to show signs of stabilizing after five consecutive years of annual declines.
Intel has historically relied on the PC market as its primary engine of growth. As the PC market has declined in recent years, Intel has sought to diversify outside of its core business with mixed results. On the earnings call, Krzanich frequently referred to Intel as a company in transition and highlighted growth and opportunities in IoT, networking, autonomous driving and others.
Intel (Santa Clara, Calif.) reported sales of $16.4 billion for the fourth quarter, an increase of 10 percent from the fourth quarter of 2015. The company reported a net income for the quarter of $3.9 billion, up 4 percent from the same period of 2015.
Intel reported year-over-year quarterly sales growth across its Client Computing Group, Data Center, IoT, Non-Volatile Memory and Security groups.
Intel’s Client Computing Group, the company’s largest business unit which products for PCs, servers and mobile devices, had sales of $9.1 billion in the fourth quarter, up 4 percent from the fourth quarter of 2015.
Intel reported record sales of $59.4 billion for 2016, an increase of 7 percent from 2016. The company reported a net income of $10.3 billion based on generally accepted accounting principles (GAAP), down 10% from 2015.
For the first quarter of 2017, Intel said it expects sales of between $14.3 billion and $15.3 billion. The company expects 2017 sales to be roughly flat with 2016, and said it expects to allocate between $11.5 billion and $12.5 billion for capital spending during the year, up from $9.5 billion last year.
—Dylan McGrath covers the semiconductor industry and business news for EE Times.