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Intel's Fourth Quarter Revenue and Profit Uptick Driven by Data Center Growth


Intel's Fourth Quarter Revenue and Profit Uptick Driven by Data Center Growth
Driven by a stabilizing PC market and growth in its data center business, which offers cloud-based software services, Intel Corp reported better-than-expected quarterly revenue and profit.
While revenue from the traditional PC business of the company rose 4.3 percent to reach $9.13 billion, the revenues from the data center business rose a lot more – by 8.4 percent to reach $4.67 billion in the fourth quarter.
The company said on a call with analysts after the results that while it was not very optimistic about an improvement in its enterprise unit, it however continues to expect a similar growth rate in the cloud segment which it expects would provide a bost ot its overall growth.
The sale of chips for mobile phones and tablets are all part of its PC unit business.
In the fourth quarter of the last fiscal year, there was a drop of 1.5 per cent in the the global PC shipments of Intel which includes shipments of of laptops, desktops and workstations. According to research firm IDC, this decline is a confirmation of the continuance of the recent trend of stabilizing demand as there had been a 3.9 percent decline in the preceding quarter in the same figures.
"In the data center group, it seems that cloud is still an area of strength, offsetting the weakness in enterprise," Stifel Nicolaus analyst Kevin Cassidy said.
Further growth in the business is expected as the enterprise clients would upgrade their data centers at some point in the future, Cassidy added.
 With the intention to reduce dependence on the PC market, which has been roiled by users' shift to mobile phones for their computing needs, Intel has been building its data center, Internet of Things and automotive businesses.
The average analysts' estimate of $15.75 billion in revenues, according to Thomson Reuters I/B/E/S estimates, was beaten by the Santa Clara, California-based company's net revenue as it rose 9.8 percent to reach $16.37 billion.
Beating estimates of 74 cents per share, the company earned 79 cents per share excluding items.
However, from $3.61 billion, or 74 cents per share, a year earlier, for the fourth quarter ended Dec. 31, the company said its net income fell to $3.56 billion, or 73 cents per share.
Investors were pleased at the revenue estimates by the company for 2017 as instead of giving aggressive estimates, they would rather have conservative estimates for the year, and then have it go up. Intel’s estimates for revenues were flat for 2017.
While Analysts on average were expecting $14.53 billion, Intel said it expects first-quarter revenue of $14.8 billion, plus or minus $500 million.
In extended trading on Thursday there was little change in the shares of the world's largest chipmaker.
While falling short of the 60 percent rise in the broader semiconductor index, Intel's shares had risen 25.5 percent in the last 12 months up to Thursday's close.