Intel Bullish Over Future Of PC Industry

After several years of trauma, Intel, believes the worst is finally over for the PC industry, and has raised its forecast for third-quarter sales, sending its share price upwards.

The prediction about the future of the PC industry came as Intel posted positive second quarter results, with net profit up a highly impressive 40 percent to $2.8bn (£1.6bn), from $2bn (£1.2bn) in the same year-ago quarter. There was similarly good news on the sales side, with revenues climbing eight percent to $13.8bn (£8bn) from $12.8bn (£7.5bn) a year ago.

“Our second-quarter results showed the strength of our strategy to extend the reach of Intel technology from the data centre to PCs to the Internet of Things,” said CEO Brian Krzanich. “With the ramp of our Baytrail SoC family, we have expanded into new segments such as Chrome-based systems, and we are on track to meet our 40 million unit tablet goal. In addition, we hit an important qualification milestone for our upcoming 14nm  Broadwell product, and expect the first systems to be on shelves during the holidays.”

So what is driving this good news? Well it seems that actual PC sales are driving growth for Intel, after its PC Client Group platform reported volumes up 9 percent to $8.7bn (£5bn) in the quarter, despite the fact that platform average selling prices were down 4 percent from a year ago.

Likewise, Intel’s move into the data centre is also paying off, with its Data Center Group reporting revenues of $3.5bn (£2bn), up 14 percent sequentially and up 19 percent year-over-year. Meanwhile the Internet of Things Group posted revenues of $539 million (£315m), up 12 percent sequentially and up 24 percent year-over-year.

There was less good news on the mobile side, where Intel is still struggling against chipmakers who base their processors on designs from ARM Holdings. Intel’s Mobile and Communications Group posted revenues of $51 million (£30m), down 67 percent sequentially and down 83 percent year-over-year. The software and services operating segments revenue of $548 million (£320m), was down 1 percent sequentially and up 3 percent year-over-year.

Stabilised PCs

Despite those mixed results, Intel’s bullishness about the overall state of the PC industry stems from the fact that this is now the second consecutive quarter where the company has benefited from the hardware refresh prompted by migration away from Windows XP.

Krzanich also told analysts that improved demand from businesses replacing their XP-based PCs should last until the end of this year, at least.

“PCs have stabilised,” Chief Financial Officer Stacy Smith told Reuters. He said he expects shrinking demand from consumers in China and other developing countries to rebound, just as it recently has in the United States.

The Santa Clara, California chipmaker also pleased Wall Street in forecasting better times ahead, after it raised its third-quarter revenue above analyst expectations to $14.4bn (£8.4bn).

And Intel also pleased shareholders when it said it would return more cash to investors. It authorised an increase of $20bn (£11.7) to its share repurchase program. Intel boasted that it has returned almost $90bn (£52.5bn) to shareholders over the past ten years.

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