Solid earnings report comes from increased demand for PC CPUs, but growth in mobile once again proves to be non-existent.
For all the talk about the PC being dead, another piece of news shows that this is more hyperbole than fact. Intel on Tuesday released its second quarter earnings, which saw the company’s earnings jump by 40 percent.
Intel posted quarterly earnings of $2.8 billion on revenue of $13.8 billion. This works out to an earnings per share ratio of 55 cents. This figure came in higher than what analysts expected, with Wall Street projecting earnings of 52 cents on revenue of $13.7 billion. Its gross margin, also expanded hitting 64.5 percent, compared with 59.6 percent in the first quarter.
These solid earnings were largely driven by Intel’s PC client group, its largest and best known business, which increased revenue 6 percent to $8.7 billion. Earlier, in Intel’s guidance to investors, the company said that it expected to add an additional $700 million in revenue from the division because of high demand for CPUs. This increase comes from pent-up demand in the PC market, as Microsoft’s retirement of Windows XP has forced a number large Enterprise customers, along with others, to replace the PCs in their office.
The data center group, which makes Intel’s Xeon server chip, posted an increase of 19 percent, to $3.5 billion.
But when sore spot in Intel’s earnings report was mobile and communications group. While Intel is spending a hefty sum on contra revenue programs and innovation funds to encourage manufacturers to put Intel’s chip inside their mobile wins, the division it brought $51 million in revenue which is down 67 percent from last quarter and 83 percent from the same quarter the year before. Granted, this could be because a number of one-time costs associated with setting up the $100 million Shenzhen innovation fund occurred this quarter. Despite this poor performance, Intel says it is on track for meeting its 40 million tablets shipped goal.
Intel projects its upcoming third quarter will bring in $14.4 billion in revenue.