Intel Earnings Beat Street, Despite Worldwide Dip in PC Sales

Despite the fact that PC shipments worldwide continue to decline, the Client Computing Group made a strong showing with 12 percent revenue growth at $8.2 billion in revenue.

Intel.SSD

Intel squarely beat the so-called Street July 27 when it brought in Q2 2017 revenue of $14.76 billion versus $14.41 billion expected by Thomson Reuters analysts.

As a result, the stock took a 4 percent jump in after-the-bell trading on the positive news. Earning per share amounted to 72 cents against 68 cents in EPS expected by the analysts.

The results were quite welcome at the company headquarters in Santa Clara and among investors after the world's largest chipmaker barely beat expectations on EPS and undercut expectations on revenue in Q1 2017.

Despite the fact that PC shipments worldwide continue to decline, the Client Computing Group made a strong showing with 12 percent revenue growth at $8.2 billion in revenue.

Among Intel divisions, the top financial performer was the Non-Volatile Memory Solutions Group, whose revenue of $874 million was a record high--up year over year by 58 percent.

The company's Data Center Group saw its revenue improve 8 percent year over year, compared with the Client Computing Group's 2 percent growth. The Data Center Group was up 9 percent at $4.4 billion.

Meanwhile, the company has been talking up its opportunity in artificial intelligence, thanks to acquisitions of companies like Altera, Nervana, Mobileye and Movidius.

As for Q3 2017 guidance, Intel said it's expecting 80 cents in earnings per share on $15.7 billion in revenue. For the full year, the company expects $3 in earnings per share and $61.3 billion in revenue.

CEO Brian Krzanich told analysts on the conference call that he is committed to a spending target of 30 percent of revenue and that he's expecting the company to reach that goal no later than 2020. The company will make these ongoing changes to meet that goal while also driving growth, Krzanich said.

"Intel had a very good Q2. What struck me was the diversity of their revenue and their ability to grow in areas where many doubted they could see a lot of growth or success," Moor Insights principal Patrick Moorhead said in a media advisory. "IoT grew 26 percent, flash memory grew 58 percent, and cloud and comms service providers grew 35 percent and 17 percent respectively. Even notebooks grew 20 percent, a big surprise to me.

"The things to factor in the future equation is when Nervana, Optane and MobileEye all get fully on-line, counterbalanced by some of the competitive impact in AI and general-purpose x86 processors.

"All in all, this was a very solid quarter and gives indications of some many positive things for the future for Intel."

Chris Preimesberger

Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he has...