Intel Q4 Beats Street on PC Resurgence, but Guidance Weak

Chipmaker Intel beat the forecasts of analysts with a fourth-quarter profit of 74 cents on revenue of $14.72 billion, but issued guidance for the current quarter that was below expectations.

Intel shares fell two percent to $35.39 in after-hours trading after the results were reported.

For the quarter ending in March, Intel said it expects revenue of $13.7 billion, plus or minus about $500 million. The midpoint was lower than the $13.8 billion analysts had called for.

Reflecting sales of personal computers that rebounded last year on the heels of the industry’s worst year ever, as well as a surge in sales of servers, Intel beat the 66-cent consensus of analysts by eight cents. Revenue at $14.72 billion rose 6 percent versus the same period a year, and came in slightly above the consensus.

“The fourth quarter was a strong finish to a record year,” CEO Brian Krzanich said in a statement. “There is more to do in 2015. We’ll improve our profitability in mobile, and keep Intel focused on the next wave of computing.”

Here are a few other highlights from the quarter: Revenue in the Client Group, Intel’s name for the business that caters to personal computer manufacturers, rose 3 percent from the year-ago quarter. Revenue in the Data Center Group, which deals with servers, rose 25 percent year on year.

Intel’s gross margin, a closely-watched metric indicating profitability, was 65.4 percent, up slightly from the prior quarter and 1 percent better than what Intel said it expected.

Mobile revenue, long a business where Intel has faced challenges, posted revenue of $202 million, down 85 percent from the year-ago period. Intel hit its goal of placing its chips inside 46 million tablets, though it lost money on them because it pays tablet makers to use its older generation of mobile chips.

Internet of Things, a business unit devoted to wearables and other small devices, rose 19 percent to about $2 billion.

For the full year, Intel finished the year with $56 billion in sales, up 6 percent, with earnings per share of $2.31, up 22 percent from 2013. It exited the quarter with $14 billion in cash and investments on the balance sheet, and bought back $4 billion worth of shares during the quarter.

“The data center unit drove double-digit growth buoyed by increases in the cloud server market as well as networking where it is gaining market share,” said Patrick Moorhead, an analyst with research firm Moor Insights and Strategy. “Intel had already warned at its last financial analyst day, mobility numbers would be brutal, but it did exceed the 40 million tablet goal by 6 million units. Still the mobile losses will continue, but that’s the price of admission of being late to the market.”

On a conference call with analysts, Krzanich sounded an upbeat note on the prospects for the PC market in 2015. “The innovation and the options in the PC market have never been better, so I’m comfortable about where we are with the PC market,” he said. He said a new variety of products ranging from low-priced Chromebooks running Google’s Chrome OS and up to new higher-priced products like Hewlett-Packard’s Sprout will spur healthy sales.

This article originally appeared on Recode.net.

Will you support Vox’s explanatory journalism?

Most news outlets make their money through advertising or subscriptions. But when it comes to what we’re trying to do at Vox, there are a couple reasons that we can't rely only on ads and subscriptions to keep the lights on.

First, advertising dollars go up and down with the economy. We often only know a few months out what our advertising revenue will be, which makes it hard to plan ahead.

Second, we’re not in the subscriptions business. Vox is here to help everyone understand the complex issues shaping the world — not just the people who can afford to pay for a subscription. We believe that’s an important part of building a more equal society. We can’t do that if we have a paywall.

That’s why we also turn to you, our readers, to help us keep Vox free. If you also believe that everyone deserves access to trusted high-quality information, will you make a gift to Vox today?

One-Time Monthly Annual

$5/month

$10/month

$25/month

$50/month

Other

$

Yes, I'll give $5/month

Yes, I'll give $5/month

We accept credit card, Apple Pay, and Google Pay. You can also contribute via