Intel: Solid 2016 Sales Will Climb In 'Mid-Single-Digit' Percentage Range

Intel expects revenue growth in the mid-single digits for fiscal 2016 -- a step in the right direction as the chip company struggles with a sluggish PC market.

The Santa Clara, Calif.-based company's data center, Internet of Things and memory businesses are expected to be strong growth engines, said Intel CEO Brian Krzanich during Intel's annual investor meeting Thursday.

"Our financials show that Intel's transformation is underway, and we're forecasting growth for 2016," said Intel CFO Stacy Smith in a release. "The 2016 dividend increase reflects confidence in the strategy and Intel's ongoing commitment to create value and return cash to shareholders."

[Related: Intel's New High-Performance Coprocessors Coming To Supercomputers Next Year]

The forecast sent Intel's stock climbing Thursday afternoon, up 3.8 percent, to $34.42.

Krzanich also stressed that Intel's client computing group will continue to serve as the company's foundation for sales, particularly with the company's new family of chips, based on its sixth-generation 14nm Skylake microarchitecture, hitting the market during the holiday season, as well as Microsoft's new Windows 10 operating system.

Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based Intel system builder partner, said the company's data center segment will have an important influence on his own business.

"We do not play so much in the IoT segment, but our data center business has been growing steadily year on year, and we look for that to continue into 2016 and beyond," Kretzer told CRN. "I do find it interesting that 15 percent of [Intel's] capital spending will be on memory -- especially seeing as market predictions industrywide were for a decrease as the spending forecast in the DRAM [dynamic random-access memory] sector had a strong downward adjustment."

Intel and other companies in the PC market have struggled: Market research firm IDC reported PC shipments dipped 10.8 percent from last year's third quarter, while the market faces a transition period in the midst of a major operating system upgrade clouded by challenging financial conditions.

Microsoft, HP, Lenovo Group Ltd. and others have announced new Skylake-based devices that will be available during the holiday season. Despite a grim PC outlook, Intel's data center segment and Internet of Things segment continue to show strong growth, the company said.

During Intel's third-quarter earnings announcement, the company said that though its client computing group, hit by weak PC sales, was down 7 percent from the year-ago quarter, the company's data center group revenue was up 12 percent, and its Internet of Things group was up 10 percent from the same quarter last year.

Intel in November said its first Xeon server CPUs -- paired with FPGAs (field-programmable gate arrays) that the company gained from soon-to-be-acquired Altera -- will hit the market in the first quarter of 2016, providing another boost for the company. Intel estimates that FPGAs will be used in 30 percent of data center servers by 2020.

PUBLISHED NOV. 19, 2015