Intel CEO Bullish On Q4 Data Center, IoT Investments Despite PC Struggles

Despite a struggling PC market, Intel CEO Brian Krzanich underlined his confidence in the company's investments in other areas, such as the Internet of Things, data center and memory sectors, in the company's Thursday fourth-quarter earnings call.

"Intel is evolving and our strategy is working," he said. "This year, we’ll continue to drive growth by powering the infrastructure for an increasingly smart and connected world. ... We continue to look ahead and are confident that we'll continue into double-digit growth in the data center.’

A weak overall PC market drove sales of the Santa Clara, Calif.-based company's client computing unit down 1 percent year over year in the fourth quarter. Intel shares dipped 3.3 percent, to $31.67, in after-hours trading after the results were announced.

[Related: PC Market: IDC, Gartner Spot Glimmers Of Life In Ailing Segment]

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Overall, Intel posted fourth-quarter results of 74 cents per share on flat year-over-year sales of $14.9 billion. That topped the expectations of analysts polled by Thomson Reuters, who estimated results of 63 cents per share on sales of $14.8 billion.

Intel also predicted that in 2016, revenue would rise by a percentage in the mid- to high single digits, up from a previous prediction that revenue would grow in the mid-single digits.

While the company gets about 60 percent of revenue from its PC chips, Intel has been investing in its data center group, which rose in revenue 5 percent from the year before, and its Internet of Things group, which rose in revenue 6 percent year over year.

Partners, for their part, said Intel's data center, which includes high-price chips and server chips such as Ivy Bridge and Haswell Xeon, had done particularly well in the fourth quarter.

"In general the fourth quarter was a strong quarter for us with Intel. … Products doing well include Intel's server platform, like its processors and platforms in the high end and SSDs," said Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based Intel system builder. "With Skylake, we're selling as many as we can get, particularly in the higher end."

Intel hopes to continue its drive into data center and the Internet of Things with its $16.7 billion acquisition of Altera, which recently closed.

The acquisition could boost the company's presence in the IoT business, as Altera manufacturers field programmable gate arrays (FPGAs) that include programmability and high performance for Internet of Things solutions.

"We had a fantastic fourth quarter with Intel server products, specifically [the] Ivy Bridge and Haswell Xeon product lines," said Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder.

According to market research firm IDC, Framingham, Mass., PC shipments faced a year-over-year 10.6 percent decline in 2015, because of challenges from longer-PC lifecycles and competition from mobile phones and tablets.

However, there may be a light at the end of the tunnel -- analysts point to PC replacements picking up in 2016, particularly at the end of the year, because of a rapid commercial transition to Microsoft's Windows 10 operating system, which was released in July.

"As Intel has repeated for many quarters in 2014 and 2015, PCs were down and data center and IoT were up," said Patrick Moorhead, president and principal analyst of Moor Insights & Strategy, Austin, Texas. "This has been a consistent theme for the last few years. … I do think 2016 will be much better for PCs and PC-based platforms like convertibles and 2-in-1s."