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Intel reports record revenues for fourth quarter, driven by server business

The record fourth quarter occurred in spite of with flat or negative growth in PC, mobile, and Internet of Things businesses.
  • Mark Hachman (PC World (US online))
  • 17 January, 2015 01:27

Intel easily topped analyst estimates for the fourth quarter, reporting records in virtually all of its meaningful metrics for the year as a whole.

Intel's sales typically peak during the holiday sales season. A number of analysts polled by Yahoo Finance had expected earnings of $US0.66 per share and revenue of $US14.7 billion. For the fourth quarter, Intel matched the revenue expectation of $US14.7 billion, a 6 per cent increase, but exceeded the earnings expectation, hitting $US0.74 cents per share. Intel also reported profits of $US3.7 billion, up a whopping 39 per cent from a year prior.

For the full year, Intel reported revenue of $US55.9 billion and profits of US11.7 billion, with unit shipments of PCs, servers, tablets, phones and the Internet of Things reaching record highs for the company. Intel also said that its customers had shipped 46 million tablets using its chips, exceeding a goal it had set for itself.

"The fourth quarter was a strong finish to a record year," said Intel chief executive Brian Krzanich, in a statement. "We met or exceeded several important goals: reinvigorated the PC business, grew the datacenter business, established a footprint in tablets, and drove growth and innovation in new areas. There is more to do in 2015. We'll improve our profitability in mobile, and keep Intel focused on the next wave of computing."

A 'reinvigorated' PC business apparently means one that's not dropping as fast as it was a few years ago. Shipments from the company's PC Client Group, though up by 3 per cent from a year ago, were actually down by 3 per cent sequentially, to $US8.9 billion. Desktop sales fell by 1 per cent compared to a year ago, Intel said, while notebook sales climbed by 11 per cent. But the average price of Intel's desktop chips were flat, while notebook prices fell by 3 per cent.

Between the highly anticipated release of Windows 10 and the steady rise of Chromebooks, worldwide PC shipments are expected to decline by a lower-than-expected rate of 3.3 percent this year, and fall by just 1.8 per cent in 2016, IDC said.

Gartner said that PC shipments actually rose by 1 per cent in the fourth quarter, compared with the prior year. The release of Windows 10 in particular has analysts cautiously anticipating another rebound.

Intel itself has admitted, however, that many high-end hardware makers could skip its delayed Broadwell chips, which are now shipping, for the Skylake chips which will debut this fall.

Intel's profits are typically based upon its server business, however, where Intel has quietly pushed out older RISC microprocessor suppliers as well as its rival, AMD. Intel reported revenue of $US4.1 billion, up a whopping 25 percent from a year ago.

Intel saw less success in its Internet of Things business, which the company is trying to establish as its next major area of growth via standards. At CES, Intel launched "Curie," an embedded chip that's small enough to fit inside a coat button. But the business only pulled in $591 million of revenue--though that was up 10 percent from a year ago.

Intel's other businesses fared worse. Intel's software business pulled in $557 million, down 6 percent, and its struggling Mobile and Communications Group actually reported negative revenue of $US6 million.

Intel will hold a conference call later this afternoon to answer questions from analysts. The company forecast first-quarter revenue of $US13.7 billion, plus or minus $US500 million, down 7 per cent from the fourth quarter.

Why this matters:  Intel's forced to ride the wave of the PC market, up and down. But though the company's communications and IoT businesses are struggling to get off the ground, the dominance Intel has in servers can fund the emerging businesses - and Intel can still report record revenues.