Intel Reports 3% Rise in Earnings -- Update

By Tess Stynes 

Intel Corp. on Tuesday reported 3% growth in first-quarter earnings as softer demand for personal computers was offset in part by growth in its data-center business.

The semiconductor giant's shares rose 1.9% to $32.09 in recent after-hours trading. Through Tuesday's close, the stock has declined 13% this year.

For 2015, Intel said it now expects revenue to be flat from a year ago, when it reported full-year revenue of $55.9 billion. Analysts polled by Thomson Reuters expected revenue of $55.69 billion.

For the second quarter, Intel projected revenue of $13.2 billion, plus or minus $500 million. Analysts polled by Thomson Reuters expected revenue of $13.51 billion.

In January, the company withdrew its previous annual guidance for revenue growth in the mid-single digits and slashed its first-quarter outlook on weaker-than-expected demand for business desktop computers and lower inventory levels among computer and parts suppliers.

Intel on Tuesday also cut its capital spending estimate for the year to $8.7 billion, plus or minus $500 million, from its previous view for $10.0 billion, plus or minus $500 million.

The Santa Clara, Calif., company has been hurt in recent years from the shift to mobile devices from PCs. Late last year, Intel was planning to combine its operations that handle chips for PCs with those targeting smartphones and tablets amid pressures to increase its presence in mobile devices.

In the latest quarter, the combined business, called the client-computing group, said sales fell 8.4% to $7.42 billion. Sales volume rose 6% as growth in notebook and tablet volume offset declines in desktop volume. Average selling prices decreased 13%, including a 3% decline for notebook prices.

"Year-over-year revenues were flat, with double-digit revenue growth in the data center, [Internet of things] and memory businesses offsetting lower than expected demand for business desktop PCs," Chief Executive Brian Krzanich said in a news release Tuesday. "These results reinforce the importance of continuing to execute our growth strategy."

Overall, Intel reported a profit of $1.99 billion, or 41 cents a share, up from $1.93 billion, or 38 cents a share, a year earlier. Analysts polled by Thomson Reuters expected per-share profit of 41 cents.

Gross margin rose to 60.5% from 59.6%.

Revenue was $12.78 billion, compared with $12.76 billion a year ago and in-line with Intel's reduced guidance for revenue of $12.8 billion, plus or minus $300 million.

Data center group revenue climbed 19% to $3.68 billion. Sales volume grew 15%, while average selling prices increased 5%. The Internet of things business reported revenue improved 11% to $533 million.

Last week, The Wall Street Journal and other outlets reported that Intel's plan to acquire Altera Corp. appeared to have stalled. Investors likely will be watching for any details on whether there is still a chance of any deal between the chip makers.

If such a deal were to be reached, the move would represent the semiconductor giant's biggest-ever acquisition. Intel also would gain a company with faster revenue growth. Some analysts think Intel wants Altera--which specializes in field-programmable network arrays--to help defend its position in server chips.

Write to Tess Stynes at [e-mail]

Access Investor Kit for Altera Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US0214411003

Access Investor Kit for Intel Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US4581401001