Chipmaking giant Intel has announced impressive market success for the year 2016, with better than expected revenue in the fourth quarter financial reports.
Intel's Better Than Expected Quarterly Revenue
According to Forbes, Intel reported revenue up 10 percent from the previous year, or $16.4 billion. The Santa Clara, a California-based company had earnings per share of 79 cents. The figures are higher than the quarterly revenue estimated by Wall Street of only $15.75 and earnings per share of 75 cents.
Intel CEO Brian Krzanich said in a statement that the fourth quarter was great to finish for a transformative and record-setting year for the company. Intel took important steps in 2016 to refocus its resources and accelerate its strategy, while successfully integrating Altera, launching exciting new products and investing in growth opportunities, said Krzanich. He added that while being pleased with the company's performance in 2016, he also remains confident about the future.
Reasons For Company's Market Success
Last year, Intel secured a big mobile deal providing mobile modem chips for Apple's iPhone 7, after years of failure in breaking into the mobile business. The company's Client Computing Group including both the mobile and PC businesses grew to $9.1 billion in revenue or 4 percent year-over-year. This is a success for the company in the context of overall sales falling in the PC industry by 5.7 percent in 2016.
According to The Motley Fool, even if other divisions may be growing faster, PC Systems had a major contribution to lifting Intel's forth-quarter profits. However, over the past few years, Intel has been trying to move away from its dependence on PCs. The company is increasingly relying now on its data center business.
In the data center industry, Intel's processors cover a 99 percent share of the market. For the fourth quarter, the company's Data Center Group had revenue up 8 percent year-over-year. In absolute figures, the revenue of company's Data Center Group has been $4.7 billion.
Intel is also strategically investing to keep up with the competition in the artificial intelligence niche in the data center industry. AI startup Nervana has been acquired by Intel in August for an amount of over $400 million. The startup was developing an AI-optimized processor that Intel will integrate into its server products.
The company's memory chip and Internet of Things divisions grew the fastest. Quarterly revenue for memory chip business has been up 25 percent year-over-year, reaching $816 million. Internet of Things revenue grew to $726 million, an increase of 16 percent year-over-year.
The client-computing group also boosted its operating income by 30 percent. The group is, accounting now for 62 percent of company's total segment profits. In the year-ago quarter, that ratio stood at only 53 percent.
The company ended with full-year revenue up 7 percent from 2015, to reach a total of $59.4 billion. However, the chipmaker's net income went down 7 percent from the previous year, to only $10.3 billion. After announcing its positive financial results, in after-hours trading, Intel's stock was trading up more than 2 percent.
Intel will present its current strategy in more detail next month. The company has scheduled its annual investor conference for Feb. 9. Market analysts expect that Intel will announce some significant increase in capital spending.
