Intel Corporation (NASDAQ:INTC)’s second-quarter sales came in line with analysts’ estimates, due to demand for machines that run data centers.
The Company’s very own estimates depict Intel’s 2Q revenue to be US$ 13.2 billion, plus or minus US$500 million (that compares with average analysts’ projections of US$13.5 billion).
Many consumers have made a shift over to smartphones and tabs to get online,while PC-chip sales are declining. Data-center division sales rose at 19% in 1Q,as Internet companies such as Google and Facebook built out their server operations.
As per Pat Becker Jr., a fund manager at Becker Capital Management in Portland, Oregon:
“The data-center group is strong, and that’s overcoming what’s happening on the personal-computer side. The firm manages more than US$3 billion, including Intel stock. It’s a replay of what you’ve seen out of them.”
According to Intel, Gross margin, or the percentage of sales left after deducting production costs, will be about 62% in the current period. However the analysts were predicting 61%.
Intel shares rose 2.8% in extended trading following the report. They had fallen less than 1%, to US$31.49, at the close in New York, leaving the stock down 13% for this year.
Last month, Intel slashed its first-quarter sales forecast by more than $1 billion, citing weak business demand and sluggish economies, particularly in Europe. That announcement signaled the end of corporate hardware upgrades that helped to stabilize declining PC shipments last year.
The company is also preserving profit margins in a weak environment for its main product by cutting costs. Spending on new plants and equipment, known as capital expenditures, will be about US$8.7 billion, down from an earlier planned budget of about US$10 billion. At that level, capital spending would be the lowest in five years.
Intel said notebook shipments in the first quarter rose 3% from a year earlier, while average selling prices for laptop chips fell 3%. Desktop-chip shipments dropped 16%, while the average selling price went up 2%.
As it struggles to boost its mobile business, Intel is seeking to make a bigger bet on the data-center market. The company held discussions to acquire chipmaker Altera, according to people familiar with the talks.
