Intel tops Q3 targets as data center growth offsets PC dips

Wall Street was looking for earnings of 59 cents per share with $14.22 billion in revenue.
Written by Rachel King, Contributor

Intel published better-than-expected third quarter financial results after the bell on Tuesday, reinforcing the processor maker's focus on building for data centers and connected devices.

The tech giant reported a net income of $3.1 billion (statement). Non-GAAP earnings were 64 cents per share on a revenue of $14.5 billion, a smidge lower than the $14.5 billion during the same quarter a year ago.

Nevertheless, Wall Street was looking for earnings of 59 cents per share with $14.22 billion in revenue.

Intel executives attributed Q3 results to successes in its data center and Internet of Things units.

The data center group alone posted $4.1 billion in revenue, up 12 percent year-over-year. The Internet of Things Group achieved sales of $581 million during the quarter, up 10 percent from the previous year.

Software and services revenue remained flat at $556 million.

Still, Intel's top brass acknowledged growth in the data center, Internet of Things and non-volatile memory businesses helped to offset continued declines in its client group, which houses PCs.

Client Computing posted $8.5 billion in revenue, which was up 13 percent from the previous quarter but down seven percent from the same one last year.

Desktops, laptops and tablets all experienced double-digit declines in volume during the quarter -- although all three also saw average selling prices tick upward.

Intel CEO Brian Krzanich focused closer on the future of the memory business.

"Customers are excited about our new 6th Gen Intel Core processor, and we introduced our breakthrough 3D XPoint technology, the industry's first new memory category in more than two decades," Krzanich boasted, in prepared remarks.

In July, Intel -- in partnership with Micron -- unveiled 3D XPoint, touted to be at least 1,000 times faster matched by 1,000 times greater endurance than present-day NAND solutions on the market.

The transistor-less storage and memory platform is designed to offer a non-volatile, high-performance interface touting high-speed access to data and applications stored closer to the processor.

Intel also unveiled its new Skylake processor family in September with the hopes of persuading PC users at home and in the workplace to upgrade their systems on the promises of triple the battery life and thirty times better graphics than machines from five years ago.

For the current quarter, Wall Street is looking for non-GAAP earnings of 60 cents per share with $14.83 billion in revenue.

Intel responded with a Q4 revenue outlook of $14.8 billion, plus or minus $500 million.

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