Intel reported earnings today that beat expectations for the fourth quarter, but it is forecasting a weaker than usual first quarter because of concerns about the Chinese stock market turmoil and larger “macroeconomic concerns,” said Intel chief executive Brian Krzanich, in a call with analysts.
The world’s biggest chip maker reported earnings of $3.6 billion, or 74 cents per share, on revenue of $14.9 billion. Analysts had expected earnings per share of 63 cents on revenue of $14.8 billion. So those results were good.
But looking ahead, Intel said that non-GAAP revenue is expected to be $14.1 billion in the first quarter, with a gross margin target of 62 percent. For 2016, Intel’s research and development spending will be $21.3 billion. The revenues are on the lower end of the usual Q1 seasonal outlook, and the reasons are related to uncertainty in the market.
As for new products coming, Krzanich said, “The excitement is there. We just have to get past the macroeconomics.”
In after-hours trading, Intel’s stock is 4.1 percent to $31.39 a share, down $1.35. Overall, Intel’s stock is valued at around $154 billion.
Stacy Smith, chief financial officer, said on the call that the outlook is “on the low-end of the average range.” Intel said that growth in China and emerging markets is slowing, both in consumer markets and the enterprise. There’s also some uncertainty in the data center side, Krzanich said.
Smith said that the PC supply chain remains healthy and there doesn’t appear to be an excess of inventory in the market.
During the fourth quarter, Intel ramped up sales of its 14-nanometer Skylake processors, formally known as 6th-generation Intel Core processors. Those chips, optimized for Microsoft’s Windows 10, are targeted at everything from tablets to high-end gaming PCs.
Intel is also strong with its dominance in the server chip market, which generates around $14 billion a year for the company, according to Gartner. And the company is preparing a formal launch of its Curie processor, a sub-$10 chip that is targeted at the Internet of Things, or making everyday objects smart and connected.
During the fourth quarter, Intel completed its $16.7 billion acquisition of Altera.
For the full year, Intel reported net income of $11.4 billion, or $2.33 a share, on revenue of $55.4 billion. Intel has $19 billion in cash from operations.