Intel’s sales outlook signals no meltdown from chip flaws
Forecast indicates optimism as annual revenue expected to rise to a record $65 billion
Intel Corp., whose microprocessors dominate the personal-computer market, gave an upbeat quarterly and annual sales forecast, signalling optimism that demand will persist even as the industry scrambles to fix vulnerabilities in its PC and server chips.
Sales in the current period will be about $15 billion (U.S.) , plus or minus $500 million, and annual revenue will rise to a record $65 billion, the company said in a statement late Thursday. The projections exceed analysts’ estimates.
Intel shares gained 6 per cent in pre-market trading at 6:04 a.m. in New York Friday, after closing at $45.30. The stock rose 27 per cent in 2017, lagging behind the 38 per cent advance in the Philadelphia Stock Exchange Semiconductor Index. The benchmark has outpaced Intel so far this year, too.
Chief executive officer Brian Krzanich is trying to remake Intel into a more general provider of chips, expanding into new markets such as self-driving cars and industrial systems. While those efforts helped, it was a 20-per-cent sales jump in its data-centre chip business that really powered the quarter — and will de- termine success for the foreseeable future.
Intel repeated its assertion that chip flaws known as Meltdown and Spectre won’t have a material impact on its finances. Forecasts didn’t budge after the potential exploits were made public in early January. Krzanich said Intel has made progress on patching exposed computer systems, but said he’s “acutely aware that we have more to do.”
The chipmaker’s outlook indicates that corporations are spending on infrastructure, a good sign for earnings reports by companies such as Microsoft Corp., Kim Forrest, an analyst at Fort Pitt Capital Group, which owns Intel shares.
“They look really good,” she said. “Even the data centre came back.”
In the fourth quarter, sales climbed 4.3 per cent to $17.1 billion, Intel said. The company posted a net loss of 15 cents a share because of an income tax expense of $5.4 billion, a result of the new U.S. tax law passed last month.
Excluding certain items, profit was $1.08 a share. On that basis, analysts had projected 87 cents in profit, on revenue of $16.4 billion.