Intel Corp on Wednesday showed that it was grappling with one of the greatest transitions in its history: Putting itself at the center of a world of computation.
The company reported that second-quarter revenue from chips for PCs fell 14 percent. For the year, Intel said PC chip sales would be lower than last year by “the high single digits.” The decline was forecast at about 5 percent.
Intel has been working on making a new future for itself by investing more in chips for data centers and Internet-connected products for industry — and some of those investments are paying off.
Sales of chips for data centers rose 10 percent from a year earlier. In total, data center, Internet of Things and high-level memory chip sales accounted for 40 percent of revenue and 70 percent of profits.
In the second quarter, Intel reported net income of US$2.7 billion, or US$0.55 per share. That was down US$100 million from a year earlier, but was the same in per-share terms because Intel has bought back a lot of its stock. Net income was also lifted by a lower tax rate. Revenue fell 5 percent to US$13.2 billion.
The results were above the expectations of Wall Street analysts, who had forecast that Intel would make US$0.5 per share on revenue of US$13.04 billion, according to a survey of analysts by Thomson Reuters.
“Second-quarter results demonstrate the transformation of our business,” Intel chief executive officer Brian Krzanich said in a statement. “We continue to be confident in our growth strategy and are focused on innovation and execution.”
Intel chief financial officer Stacy Smith said in an interview that PCs remained an important business.
“The PC continues to be one of the key form factors people use to compute,” Smith said.
Some analysts were skeptical of how much of a boost Intel could expect to see from Microsoft Corp’s new Windows 10 operating system.
“In the past we’d see a new operating system every three years or so, and people would buy a new PC,” Edward Jones analyst Bill Kreher said. “Now a lot of things you do are based on subscriptions in the cloud, and you don’t need new hardware to get a subscription.”
Smith and others have argued that Intel’s latest chips, which enable facial-recognition log-ons and gaming with touch screens, would still make hardware attractive. The company said it would have a third chip based on its current 14 nanometer wires, instead of the usual two, next year.
Chips with a 10 nanometer wire are expected in 2017.
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