The move to the cloud, and the data center, is proving to be a smart one for Intel. On Thursday, the world's largest chipmaker reported better-than-expected third-quarter earnings and sales, led by big gains in products for data centers and cloud computing technologies.
For the three months ending Sept. 30, Intel said it earned $1.01 a share, excluding one-time items, on $16.15 billion in revenue, compared with a profit of 80 cents a share, on sales of $15.8 billion a year ago.
Intel's results also topped the estimates of Wall Street analysts, who forecast Intel to earn 80 cents a share on $15.73 billion in revenue.
"Our strategy is to be the driving force of the data revolution, said Intel Chief Executive Brian Krzanich [pictured here], on a conference call to discuss Intel's results. "Our transformation is accelerating. We're excited about both our products and progress. There's lots of room to grow our market share."
Client computing, or chips for personal computers, remained Intel's biggest business area, with revenue of $8.9 billion. However, that total was flat with the same period a year ago.
In contrast to its PC business, all of Intel's other main product lines showed improvements. Data center revenue climbed 7 percent, to $4.9 billion, and Intel's internet of things (IoT) revenue rose 23 percent, to $849 million. What Intel calls "non-volatile" memory revenue surged by 37 percent, to $891 million, and programmable solutions sales reached $469 million, a 10 percent gain from a year ago.
"These were very strong results for Intel," said Mark Hung, an analyst with technology research firm Gartner. "In addition, the majority of its data center revenue is now coming from cloud and communication service providers, rather than the traditional enterprise clients."
Rob Enderle, director of tech consultancy the Enderle Group, said the performance of some of Intel's businesses suggests the company has made the right bets at a time of change among its larger enterprise customers.
"IoT and non-volatile memory solutions groups showed almost unbelievable growth in the high double digits, and this shouldn't be a fluke," Enderle said. "This likely reflects a continued massive migration away from rotating media like magnetic drives, and aggressive deployment by its partners of Intel's IoT solutions."
With the outlook for its higher-growth businesses improving, Intel said it expects to report a full-year profit of $3.25 a share, excluding one-time items, on $62 billion in revenue.
Following the earnings results, Intel's investors lifted the company's shares by about 2.4 percent, to $42.35, in after-hours trading as of 3:20 p.m. PDT.
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