Intel had a surprisingly good third quarter with record revenues.
The giant chipmaker’s stock jumped 3% in after-hours trading on news it had $19.2 billion in revenues for the quarter that ended Sept. 28. That’s up slightly from a year ago. However, net income was down 6% to $6 billion.
“Our third-quarter financial performance underscores our progress as our data-centric businesses turned in their best performance ever, making up almost half our total revenue in a record quarter,” said CEO Bob Swan. “We now expect to deliver a fourth record year in a row.”
After many analysts and investors have criticized Intel for troubles in shipping its 14 nm chips and praised competitor AMD instead, the third quarter report was somewhat reassuring.
For data center server customers, Intel is still the “behemoth,” declared analyst Tim Lesko of Granite Investment Advisors on CNBC.
Despite record revenues, Swan recognized problems with shortages in shipments of PC client chips. While shipments are up more than 10% in the second half of the year, “that growth hasn’t been sufficient,” he said. “We are letting customers down.” He explained that the market for PC chips was stronger than forecasted, and while Intel is building up inventory, the company still expects “challenges” in the fourth quarter. “We have more work to do.”
Chips used in client computing like desktop PCs and laptops made up Intel’s top revenue segment at $9.71 billion, down 5% from a year ago. Data center group sales were $6.38 billion, up 4%, and the IoT group had $1.23 billion in revenue, up 9%. Intel’s data-centric sales, including data center, IoT, non-volatile memory, MobileEye and programmable solutions, totaled about half of all sales, totaling $9.58 billion.
Swan said 18 manufacturers have shipped PCs with Intel’s latest 10nm Ice Lake processors (Intel’s 10th Generation Intel Core) out of 30 that will ship by year’s end. Comet Lake processors for mobile PCs and new Xeon W and X-Series processors have also been announced.
The key opportunities for all of 2019 will be in networking, including 5G, IoT and AI, Intel said. Overall, networking will result in revenues of $5 billion, while IoT and Mobileye will bring in $5 billion and AI $3.5 billion.
For the fourth quarter, Intel said it expects $19.2 billion in revenue, a gain of 2.9% over last year’s fourth quarter. For all of 2019, Intel expects $71 billion in revenues, an increase of $1.5 billion over its July forecast.
Data center revenues are expected to be flat to slightly up for the year, with PC revenues flat to slightly down.
Intel’s stock price was $52.23 at the market close on Thursday.