View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
  2. Data Centre
April 15, 2015

Intel’s Q1 saved by data centres as PC market slump continues

Revenues remained flat at $12.8bn.

By CBR Staff Writer

Intel’s first quarter revenues remained flat year-on-year (y-o-y) at $12.8bn, with the fall in sales of desktop PCs being offset by a raise in data centre, IoT and memory businesses.

The semiconductor manufacturer posted a net income of $2bn, up 3% y-o-y, and generated approximately $4.4bn in cash from operations.

However, compared to the previous quarter, the net income was down by 46%, and the revenue by 13%.

The results were in line with Intel’s forecast in March that revenues will fall due to a slump in PC sales. It predicted a $1bn fall in revenues from the January forecast of $13.7bn.

Intel CEO Brian Krzanich said: "Year-over-year revenues were flat, with double-digit revenue growth in the data center, IoT and memory businesses offsetting lower than expected demand for business desktop PCs.

"These results reinforce the importance of continuing to execute our growth strategy."

Business segment wise, Client Computing Group revenue fell by 8% y-o-y and 16% sequentially to $7.4bn. Data Center Group was down 10% sequentially and up 19% y-o-y at $3.7bn.

Content from our partners
The growing cybersecurity threats facing retailers
Cloud-based solutions will be key to rebuilding supply chains after global stress and disruption
How to integrate security into IT operations

The Internet of Things Group revenue of $533m was down 10% sequentially and up 11% y-o-y. Software and services operating segments revenue was at $534m, down 4% sequentially and down 3% y-o-y.

Richard Windsor, analyst at Edison Investment Research, commented: "Intel reported Q1 15A results in line with reduced expectations but guided well thanks to the continued strength of the data centre."

"As usual, the problem was the PC market but in this instance it was not the consumer but the small and mid-size businesses that bought fewer PCs than expected.

"The good news is the data centre, where demand has been stronger than expected allowing Intel to guide better than feared. Intel also moved to account for weaker expectations overall for the PC market in 2015E by reducing its full year revenue forecast from mid-single digit revenue growth to approximately flat putting an end to any hopes of revenue growth.

"Profitability remained strong as the mix shift towards the data centre is helping gross margins remain in the low 60s. That being said, Intel is taking a more cautious stance to 2015E and is trimming capex and share buy backs to reflect its expectation that cash flow will be lower than originally budgeted.

"Intel and Microsoft are our top choices for ways to play a recovery in the PC market but for another year it looks like hopes will be dashed. In the long term, Microsoft and Google remain the best ways to play the digital ecosystem."

Websites in our network
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy