INTC Intel Corporation

By Ted Greenwald 

Intel Corp. reported record growth in fourth-quarter revenue as sales in its data-center business jumped 20%, while the company swung to a quarterly loss as it booked a $5.4 billion charge after recent changes in U.S. tax law.

Overall revenue rose 4% to $17.05 billion. Intel reported a $687 million loss, compared with a profit of $3.56 billion a year earlier, largely because of the tax impact.

The company said it expects a 2018 tax rate of 14%, compared with an adjusted rate of 23% in 2017, which doesn't account for the tax impact.

The chip giant also announced a 10% rise in its annual dividend to $1.20 a share.

Sales in the division responsible for server chips and other data-center gear -- a critical area as personal-computer sales wane -- climbed to $5.6 billion. That pushed full-year growth in the segment to 11%, above Intel's goal of high single-digit growth for 2017.

In an interview with The Wall Street Journal, Intel finance chief Bob Swan attributed the growth to demand from cloud vendors and communications networks, as well as surprisingly strong sales to corporate data centers, which had been sluggish.

"We saw strong customer demand for high-performance products across the board," he said. He cautioned, however, he doesn't expect the rising pace of sales to corporate customers to continue.

Intel's report Thursday came as the company continues to work on closing recently disclosed security holes in virtually all its processors.

The company has said that it doesn't expect the security flaws to affect its finances, but questions linger about just how seriously customers are affected, especially those that operate large data centers, and what redress they might demand. At the outset of the company's conference call with analysts, Chief Executive Brian Krzanich said Intel is working around the clock to fix the flaws, but conceded that "while we've made progress, I am acutely aware that we have more to do."

In the personal-computer division, where Intel faces stepped up competition from Advanced Micro Devices Inc., sales fell 2%, in line with the quarter's drop in PC shipments tallied by industry researcher Gartner Inc.

Intel has been trimming costs to keep margins up as it transitions from PCs to a broader technology portfolio. It has pledged to bring annual operating expenses to 30% of revenue by 2020. In the quarter, it cut those costs to 31% of revenue, compared with 34% in the year-earlier period and averaging 33.7% for the year.

The company also posted strong growth in some areas where it has been seeking to expand its market, though the businesses for now are much smaller than PC and data-center chips.

Sales of programmable chips, which can be reconfigured on the fly, were up 35%, while sales of chips for a variety of items known as the Internet of Things, were up 21%. Memory, where Intel is investing heavily, achieved profitability, Intel said, though sales growth slowed to 9%, a slightly steeper drop than some analysts expected.

Intel shares were up 3.5% after hours, having fallen 0.5% to $45.30 in regular New York trading. Through Thursday's close, the stock was up 29% since late July, when surging second-quarter revenue and profit sparked investor confidence that the company could overcome its challenges.

The company's forecast for the current year was for profit of about $3.55 a share on an adjusted basis, on revenue of about $65 billion, compared with $3.46 a share in adjusted profit and $62.8 billion in revenue for 2017.

Intel reported per-share earnings of $1.08 for the quarter on an adjusted basis, which excludes the tax-law impact and other items such as restructuring and acquisition-related costs. Analysts surveyed by Thomson Reuters had expected adjusted profit of 86 cents a share on $16.35 billion in revenue.

--Maria Armental contributed to this article.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

January 25, 2018 20:35 ET (01:35 GMT)

Intel (NASDAQ:INTC)
Historical Stock Chart
From Mar 2024 to Apr 2024

Intel (NASDAQ:INTC)
Historical Stock Chart
From Apr 2023 to Apr 2024