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Intel stock falls on glum Q4

By Chris Williams, 19 Oct 2016

Intel's share price is down 5.22 per cent to $35.78 apiece in after-hours trading today after the biz predicted a slightly less rosy fourth quarter than expected.

Analysts had hoped Chipzilla would promise to deliver a $16.1bn quarter in the final three months of the year – the processor giant instead said it's aiming to bag $15.7bn, plus or minus $500m, in revenues.

Essentially, enterprise data center chip sales are not as strong as Intel had hoped, and with a shrinking PC market, a less-than-stellar final quarter of the year is predicted.

Processor chip sales for cloud system are strong, apparently. Ultimately, an Intel Xeon sale is an Intel Xeon sale whether it's going into a private or public cloud. As enterprise apps migrate to public platforms, the software is going to be running on an Intel chip at some point, so the x86 goliath is mostly relaxed about the whole ongoing off-premises transition. Its chips will be bought and deployed either way – that's the joy of being a monopoly.

Meanwhile, Intel published its Q3 2016 numbers, beating analysts' estimates for earnings and revenue. Here's what the three months to October 1 looked like:

  • Sales of $15.8bn, up nine per cent year on year. Analysts expected $15.6bn.
  • Net income of $3.9bn, up 21 per cent.
  • Earnings per share of 80 cents, better than the 73 cents analysts expected.
  • Here's the division breakdown of revenue:
    • Client Computing: $8.9bn, up 5 per cent year-on-year
    • Data Center: $4.5bn, up 10 per cent
    • Internet of Things: $689m, up 19 per cent
    • Non-Volatile Memory: $649m, down one per cent
    • Intel Security: $537m, up 6 per cent
    • Programmable Solutions (think the recently bought Altera FPGAs): $425m, down 9 per cent sequentially

"Consumer sales were better than expected but are still not back to what we'd like to see," Intel CEO Brian Krzanich told analysts on a conference call on Tuesday afternoon, adding: "Our enterprise customers tell us they want to grow their own private clouds."

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