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Intel reported that its third quarter earnings were slightly above expectations based on strong PC sales.
Intel’s results are a bellwether for the PC industry, as it is the world’s largest chip maker and the biggest supplier of PC microprocessors. But as mobile becomes a bigger piece and Intel isn’t participating in that as much as it would like, it isn’t as much of a bellwether for the entire electronics industry anymore.
In fact, Intel lost $1 billion in the quarter in its mobile and communications division. Still, the company’s results are being closely watched this quarter as a test of whether the recovery in the overall PC market is real.
For the third quarter, analysts expected Intel to post non-GAAP revenue of $14.45 billion and earnings per share to be 65 cents
Intel reported earnings per share of 66 cents (versus 58 cents a year ago) on revenue of $14.6 billion (up 8 percent from a year ago). In after-hours trading, Intel’s stock is up 2.5 percent to $32.95 a share.
“We are pleased by the progress the company is making,” said Intel CEO Brian Krzanich, in a statement. “We achieved our best-ever revenue and strong profits in the third quarter. There is more to do, but our results give us confidence that we’re successfully executing to our strategy of extending our products across a broad range of exciting new markets.”
Intel had said in June that it was raising its expectations because of strong demand for business PCs. The PC Client Group’s revenue was $9.2 billion, up 9 percent from a year ago and up 6 percent sequentially. Data Center Group revenue was $3.7 billion, up 16 percent from a year ago and 5 percent sequentially.
Krzanich, who replaced CEO Paul Otellini in the middle of 2013, has laid out a vision for wearable technology and gadgets based on the “Internet of Things,” or smarter devices that connect dumb things to the Internet. Internet of things sales were $530 million, down 2 percent from the previous quarter and up 14 percent from a year ago.
For the fourth quarter, Intel forecast revenue of $14.7 billion, plus or minus $500 million. It expects gross profit margin of 64 percent, and R&D and MG&A spending of $4.9 billion. Capital spending will be about $11 billion, unchanged.
While the PC market isn’t what it once was, Intel is still one of the most profitable companies on Earth.
Intel is still strong in data center chips, but it has a small presence in chips for tablets and smartphones, where Apple and Qualcomm are the incumbents.
So the company is playing catchup. It has said that it wants its mobile chips to be the brains of 40 million new tablets shipping this year. But it will be hard to deal with competition from Qualcomm and the many partners of ARM.
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