Intel Lifts Guidance as Profit Surges 34%
October 26 2017 - 5:18PM
Dow Jones News
By Ted Greenwald
Intel Corp. said Thursday its profit rose 34% despite increasing
competition in its core markets of supplying chips for personal
computers and corporate servers.
Profit in the third quarter was $4.52 billion, up from $3.38
billion a year earlier. Revenue rose 2% to $16.1 billion, topping
Wall Street's estimates.
The company also lifted its outlook for the full year,
forecasting adjusted earnings of $3.25 per share on $62 billion in
sales. Earlier it had expected $3 per share on $61.3 billion in
sales.
Intel's division responsible for personal-computer chips, which
brings in more than half of the company's revenue, was unchanged
from a year earlier at $8.9 billion. The unit that sells chips for
servers that drive internet companies and communications providers
-- a market central to Intel's future as PCs fade -- reported
revenue up 7% from a year ago. That growth rate keeps the server
division on track to fulfill Intel's growth target of high single
digits for the year.
"We've been in a massive transformation to leverage our core
competencies and expand them into a much larger market that's
growing faster than our historical market, and we believe we're
well positioned to capitalize on that," Robert Swan, Intel's
finance chief, said in an interview. "It's essential that we
execute on the things that matter going forward."
Intel's shares were little changed at $41.36 after hours, after
gaining 1.4% during Thursday trading in New York. The stock has
risen roughly 15% between Intel's last earnings report and
Thursday's close, after stagnating over the previous year.
Intel's dominant position in the roughly $31 billion global
market for PC chips -- it holds a 92% share, according to Mercury
Research -- has left it with little room for revenue growth even as
rivalries with other chip makers heat up. In the $16.5 billion
world-wide market for server processors, Intel holds nearly 100%,
according to Mercury.
For the first time in years, Intel faces competition on both the
PC and server fronts. Advanced Micro Devices Inc. has introduced
new chips, with more to come, priced to undermine Intel's hold on
high-performance desktops and the lower end of the server market.
However, those chips are still making their way into the
market.
Intel has responded by pouring money into improved manufacturing
methods and investing in new areas such as artificial intelligence,
autonomous driving and memory chips, where it sees potential for
growth. The company's $15.3 billion acquisition of Mobileye NV,
whose chips help power automated driving features, closed in the
quarter, and it said earlier in the month that new artificial
intelligence chips would reach some customers by the end of the
year..
Intel reported per-share earnings of $1.01 on an adjusted basis,
which excludes items such as restructuring and acquisition-related
costs. Analysts surveyed by Thomson Reuters had expected adjusted
earnings of 80 cents a share on $15.73 billion in revenue.
Write to Ted Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
October 26, 2017 17:03 ET (21:03 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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