Intel (INTC 45.47, +1.16, +2.63%) has climbed after beating
quarterly expectations and boosting its guidance for the fiscal year.
The semiconductor manufacturing giant reported above-consensus third quarter earnings of $1.40 per share on an 18.7% year/year jump in revenue to $19.16 bln, which was also ahead of estimates.
Intel's headline results easily surpassed estimates while the company's guidance was also upbeat. The company expects above-consensus fourth quarter earnings of $1.22 per share while fourth quarter revenue is expected to be roughly $19.0 bln. The strong outlook prompted the company to increase its guidance for the full year. The company now expects that earnings for the fiscal year will hit $4.53 per share, well ahead of previous guidance for earnings between $3.94 per share and $4.36 per share. Revenue is expected to reach $71.2 bln, which also represents an improvement from the previous forecast for sales between $68.5 bln and $70.5 bln.
Broadly speaking, Intel delivered another record quarter, but the company expects that its shortage of 14 nanometer manufacturing capacity will worsen during the fourth quarter, which is likely to put upward pressure on prices of 9th generation processors. These processors were launched this month, meaning that the early sales were not included in third quarter results.
The company generated record revenue in all segments while operating margin improved by five percentage points to 39.7%, the strongest level in more than a decade.
Revenue in the Client Computing Group grew 15.5% year/year to $10.2 bln while operating income jumped 25.9% to $4.5 bln. Desktop revenue increased 9% while Notebook revenue rose 13%. The average selling price of desktop processors increased 10% year/year while the average selling price of notebook CPUs grew 4%.
Data Center Group revenue jumped 25.9% to $6.1 bln while operating income spiked 36.7% to $3.1 bln. Cloud revenue grew 50% while unit volumes grew 15%. Average selling prices increased 10%. Strength in the segment was fueled by continued expansion of cloud-based services.
Intel's three smallest segments—Internet of Things, Non-Volatile Memory Solutions Group, and Programmable Solutions Group—saw a 13.0% increase in revenue. Non-Volatile Memory Solutions Group revenue increased 21.3% to $1.1 bln, Internet of Things revenue grew 8% to $919 mln, and Programmable Solutions Group rose 6% to $496 mln.
Mobileye revenue grew 50% year/year to $191 mln due to continued customer momentum. The segment secured eight new designs with major automakers, bringing its year-to-date total to 20.
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