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After the worst year on record, PC sales showed signs of bouncing off the floor in 2014, and that’s likely good news for chipmaker Intel, which reports fourth quarter earnings today.
Analysts expect Intel to report a per-share profit of 66 cents on revenue of $14.7 billion for what is usually the company’s strongest quarter of the year, and to forecast a 51-cent profit on $13.8 billion in sales for the quarter ending in March.
Sales of server chips are also looking strong, wrote Mike McConnell of Pacific Crest Securities in Portland, Ore. Sales in Intel’s Data Center business unit account for about 25 percent of sales and 42 percent of operating income.
In a note to clients Tuesday, he noted that upbeat results from Red Hat (which sells Linux software for servers) and Synnex (which resells Microsoft Windows Server software) hint at strong server sales this year. “On Synnex’s conference call, management commented that it is starting to see demand from the Windows server refresh and believes a larger portion of the benefits is likely to occur in the first half of 2015,” McConnell wrote.
One other big story to watch in today’s earnings report will be the wireless business. Long a dominant supplier for chips used to build PCs and servers, Intel has struggled to win in the smartphone and tablet market, and has promised to trim its losses in that business by about $800 million this year.
One way it intends to do that is to encourage mobile customers to shift their business away from Bay Trail, an older mobile chip it pays device manufacturers to use, and embrace SoFIA, a newer chip platform that is cheaper to make and potentially — but not yet — profitable. McConnell estimates that Intel lost $4 billion on its wireless business in 2014 and won’t break even on it before 2016.
This article originally appeared on Recode.net.
