Intel Q2 Beats Estimates on Strong Memory, Data Center, IoT Sales
Intel (INTC) posted Q2 2015 sales of $13.2 billion, operating income of $2.9 billion, net income of $2.7 billion and earnings per share of $0.55, beating analysts’ estimates on revenue and earnings.
Wall Street was looking for earnings of $0.50 per share on $13.04 billion in revenue.
Intel chief executive Brian Krzanich pointed to gains in the chip giant’s memory, data center and Internet of Things (IoT) units as offsetting losses in PCs and software and services for the quarter.
“Our second quarter results were consistent with our outlook as a year-over-year decline in the PC business was partially offset by 10 percent growth in our Data Center business, more than 40 percent growth in NAND revenue, and 4 percent growth in our IoT segment,” Krzanich said on an analysts’ conference call.
Intel’s Client Computing Group, which includes PCs and mobile devices, slid 14 percent from last year to $7.5 billion while its Software and Services segment fell 3 percent to $534 million. For the quarter, the chip maker’s Data Center unit recorded a 10 percent increase in sales to $3.9 billion and its IoT group rose 4 percent to $559 million.
Taken together, Intel’s memory, data centers and IoT businesses accounted for more than 70 percent of the company’s operating profit during the quarter.
Looking forward, Intel issued Q3 guidance of $14.3 billion in revenue, plus or minus $500 million, but cautioned that full year revenue is expected to slip by 1 percent year-over-year. Wall Street is looking for $14.1 million in sales and non-GAAP earnings of $0.56 a share.
Krzanich said he expects Intel’s new sixth-generation Core processor for PCs, code-named Skylake and slated for 2H 2015, as well as Windows 10 and new OEM systems will prop up the chip maker’s client computing business.
“We’re excited about the opportunities created by new products from our OEM partners and the upcoming launch of Windows 10,” he said. “We worked closely with Microsoft to make sure the best Windows 10 PC and tablet experience run on Intel.”
On Intel’s earnings call, Krzanich invoked Moore’s Law to further explain the chip maker’s roadmap and the “Lake” nomenclature. Here’s the text of his remarks:
Just last quarter we celebrated the 50th anniversary of Moore’s Law. In 1965, when Gordon’s paper was first published, he predicted a doubling of transistor density every year for at least the next 10 years. His prediction proved to be right. And in fact, in 1975, looking ahead to the next 10 years, he updated his estimate to a doubling every 24 months. These transitions are a natural part of the history of Moore’s Law and are a by-product of the technical challenges of shrinking transistors while ensuring they can be manufactured in high volume.
As node transitions lengthened, we adapted our approach to the Tick-Tock method, which gave us a second product on each node. This strategy created better products for our customers and a competitive advantage for Intel. It also disproved the death of Moore’s Law predictions many times over. The last two technology transitions have signaled that our cadence today is closer to 2.5 years than two.
To address this cadence, in the second half of 2016 we plan to introduce a third 14-nanometer product, code named Kaby Lake, built on the foundations of the Skylake micro-architecture but with key performance enhancements. Then in the second half of 2017, we expect to launch our first 10-nanometer product, code named Cannonlake. We expect that this addition to the roadmap will deliver new features and improved performance and pave the way for a smooth transition to 10-nanometers.