Intel Buoyed By Data Centre & IoT Despite Spectre & Meltdown

Intel has beaten Wall Street expectations for its fourth quarter and full year results, despite the firm being at the centre of ongoing security concerns from the Spectre and Meltdown chip exploits.

Revenues at the chip giant have risen strongly, but profitability at the firm slid slightly despite the strong showing of its data centre division.

And Intel has admitted for the first time that fallout from the chip exploit issue could hurt future results, but executives consistently said they did not expect that to happen.

Mixed Results

Intel presented mostly positive results this year, but overall it pleased investors and Wall Street after it beat their expectations.

For the fourth quarter ending 30 December, Intel posted a net loss of £687m (£482m), compared to a net profit of $3.6bn (£2.5bn) in the same three month period a year ago. This loss was mostly down to a $5.4bn charge related to recent changes in US tax law.

Quarterly revenues meanwhile rose to $17bn (£11.9bn) from $16.4bn (£11.5bn) a year ago.

For the full year however, Intel posted a net profit of $9.6bn (£6.7bn), down from a profit of $10.3bn (£7.2bn) for the previous year.

Annual sales rose to $62.7bn (£44bn) from $59.4bn (£41.7bn) in 2016.

“2017 was a record year for Intel with record fourth-quarter results driven by strong growth of our data-centric businesses,” said Brian Krzanich, Intel CEO. “The strategic investments we’ve made in areas like memory, programmable solutions, communications and autonomous driving are starting to pay off and expand Intel’s growth opportunity.”

“In 2018, our highest priorities will be executing to our data-centric strategy and meeting the commitments we make to our shareholders and our customers,” he added.

Intel’s stock rose 3.8 percent to $47.06, boosted by a 10 percent dividend hike and a positive forecast.

That said, whilst the Spectre and Meltdown exploits have caused global concern, Intel acknowledged for the first time, that the fallout could hurt future results.

But it indicated that it did not expect that to happen.

Krzanich was quoted by Reuters as saying that software fixes for the problems would be succeeded by solutions designed into Intel chips themselves later this year.

Divisional Breakdown

Krzanich had a right to be pleased at the success of Intel’s data centric offerings as the organisation seeks to lessen its reliance on the PC sector, which is still be far Intel’s biggest earner.

There is little doubt that Intel was helped by a strong performance from data-centric businesses in the fourth quarter, which accounted for 47 percent of Intel’s fourth-quarter revenue, an all-time high.

Intel’s Data Center Group (DCG) posted a 20 percent fourth quarter revenue rise to $5.6bn (£3.9bn); whereas its Internet of Things Group (IOTG) division posted a 21 percent rise in quarterly sales to $879m (£617m).

Intel’s Programmable Solutions Group (PSG) posted a 35 percent rise in quarterly revenue to $568m (£399m), and the Non-Volatile Memory Solutions Group (NSG) posted a 9 percent revenue rise to $889m (£624m).

On the PC side, Intel’s Client Computing Group (CCG) shipped a record volume of Intel Core i7 processors, and also launched the new 8th Gen Intel Core processor with Radeon RX Vega M Graphics.

But fourth quarter revenues at this PC unit declined 2 percent to $9bn (£6.3bn), but were up 3 percent over the entire year (2017).

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