Intel is trying hard to convince investors that it is a “data company”, not just a chips manufacturer, as it reorientates itself towards autonomous cars and the “internet of things”. But its shares jumped as much as 4 per cent on Thursday thanks largely to a strong second-quarter performance in its traditional core market of PC processors.
Intel beat Wall Street’s forecast on the top and bottom line and lifted its outlook for the rest of the year, as the chipmaker saw strong growth in both PCs and servers.
However, Intel’s outperformance on Thursday was not enough to prevent it losing its title as the world’s top chipmaker by revenues to Samsung, which earlier on Thursday reported sales of 61 trillion won, or about $54 billion. Samsung’s growth has come largely from memory chips, where a supply shortage has driven up pricing.
Revenues at Intel were up 9 per cent to $14.8 billion in the three months ending in June, compared to the $14.4 billion analysts had expected. Growth was 14 per cent after adjusting for the sale of its security division. Its largest division of client computing – which includes PC processors – was up 12 per cent, while its data centre unit gained 9 per cent.
Net income was also ahead of market forecasts, up 23 per cent to $3.5 billion, after adjusting for certain items, with earnings of 72 cents per share beating Wall Street’s consensus of 68 cents.
Intel now expects its full-year sales to be about $1 billion better than investors had anticipated, at around $61.3 billion, and adjusted earnings per share of $3.00.
‘Outstanding’ quarter
Brian Krzanich, Intel’s chief executive, said it had been an “outstanding” quarter, driven by new Core X-Series chips that are targeted at videogamers and virtual reality users, as well as new Xeon processors targeting servers used in artificial intelligence applications.
As part of its transformation, Intel is paying $15 billion to acquire Mobileye, a maker of sensors for autonomous vehicles. It expects that deal to close in the third quarter.
Intel’s shares have been largely left behind by the recent tech stock rally, trading slightly down over the year to date before closing at $34.97.
Samsung said operating profit rose 72.7 per cent to 14.1 trillion won in the second quarter, versus 14 trillion won estimated in July. Revenue rose 19.8 per cent to 61 trillion won, also in line with its earlier estimate.
It also announced its third share buyback of the year – 1.7 trillion won worth of common shares – as part of a planned annual total of 9.3 trillion won, and said it would cancel shares worth 2 trillion won.
Samsung’s share price closed down 0.1 per cent, versus a 0.4 per cent rise in the Kospi benchmark index. – The Financial Times Ltd
