Intel Results Top Estimates

(RTTNews) - Intel Corp. (INTC) said Wednesday after the markets closed that its second quarter profit fell 3% from last year, as revenue declined and gross margin shrank amid a global PC slump.

However, the company's quarterly earnings per share came in above analysts' expectations as did its quarterly revenue. At the same time, the Santa Clara, California-based company gave an upbeat revenue forecast for the current quarter, but lowered its full year revenue outlook.

"Second-quarter results demonstrate the transformation of our business as growth in data center, memory and IoT accounted for more than 70 percent of our operating profit and helped offset a challenging PC market," said Intel CEO Brian Krzanich.

Intel shares are currently gaining 2.73% in after hours trading after closing the day's regular trading session at $29.69, up 4 cents. The shares trade in a 52-week range of $28.82 to $37.90.

The world's biggest chipmaker reported net income for the second quarter of $2.7 billion or $0.55 per share, compared to $2.8 billion or $0.55 per share for the year-ago quarter.

On average, 39 analysts polled by Thomson Reuters expected the company to earn $0.50 per share for the second quarter.

Gross margin for the quarter narrowed to 62.5% from 64.5% a year earlier, mainly due to higher platform unit costs and lower platform volume, partially offset by higher platform average selling prices.

Revenue for the second quarter fell 5% to $13.20 billion from $13.83 billion in the same quarter last year. Thirty-eight analysts had a consensus revenue estimate of $13.04 billion for the second quarter.

Client Computing Group revenue for the second quarter fell 14% year-over-year to $7.5 billion. This group caters to desktops, notebooks, tablets, smartphones, wireless and wired connectivity products as well as mobile communication components.

Desktop platform volumes were down 22% and notebook platform volumes were down 11%, but tablet volumes were up 11% from a year earlier.

Intel is the world's largest supplier of microprocessors, the brains of personal computers, with roughly 80% of the global market share.

Market research firm Gartner, Inc. (IT) said last week that worldwide PC shipments fell 9.5% year-over to 68.4 million units in the second quarter of 2015, marking the steepest decline since the third quarter of 2013.

Data Center Group revenue rose 10% to $3.9 billion in the second quarter. This group caters to the server and storage markets.

Internet of Things Group revenue for the quarter grew 4% to $559 million, while software and services revenue fell 3% to $534 million.

Looking forward, the company forecasts third quarter revenue of $14.3 billion, plus or minus $500 million. Analysts currently expect the company to post revenue of $14.10 billion for the third quarter.

Gross margin for the third quarter is expected to be 63%, plus or minus a couple of percentage points.

For the full year 2015, the company now forecasts revenue to be down about 1% and Gross margin to be 61.5%, plus or minus a couple of percentage points. Previously, the company forecast revenue to be approximately flat and gross margin to be 61%, plus or minus a couple of percentage points.

Analysts currently expect the company's full year 2015 revenue to decline 2% from the full year 2014 level.

Intel said early last month that it has agreed to buy programmable chip maker Altera Corp. (ALTR) for about $16.7 billion in cash. The deal is expected to close within six to nine months.