Intel Q1 2015 Earnings: PC Business Decline Continues, But Offset By Data Center Growth

In its first quarter earnings for 2015 released today, chipmaking giant Intel reported that it missed revenue forecasts a bit, coming in at $12.78 billion, versus the $12.9 billion analysts were forecasting. Revenue growth was nearly flat for Intel. In the same quarter last year, Intel reported $12.76 billion in revenue.

The Santa Clara, Calif. giant’s biggest loses were in its Client Computing Group — which represents both its PC and mobile businesses — with revenue of $7.4 billion, an 8 percent decline year over year. Its small software group faced a bit of a decline too with revenue of $534 million, down 3 percent in the same quarter last year.

Meanwhile, Intel’s data center group continued its brisk growth with $3.7 billion in revenue, up 19 percent in the same quarter last year. Its still new Internet of Things division had revenue of $533 million, up 11 percent in the same quarter last year. Intel also cited growth in selling non-volatile memory.

“Year-over-year revenues were flat, with double-digit revenue growth in the data center, IoT and memory businesses offsetting lower than expected demand for business desktop PCs,” said Intel CEO Brian Krzanich in a statement. “These results reinforce the importance of continuing to execute our growth strategy.”

Despite revenue missing analyst expectations, Intel shares were up more than 2 percent in after-hours trading.

Intel is forecasting a 3 percent jump in revenue for the next quarter.

For a while, it seemed like losses in the PC business had finally slowed down, but numbers released last week from research firms Gartner and IDC found that the market is still not done shrinking. It’s not entirely clear how much much the declining PC market has hit Intel, as the company recently combined its mobile and PC business into one unit. Intel’s mobile unit had been losing billions as it tried to buy its way into that market.

During the earnings call, Krzanich was positive about better growth prospects for the PC business once Microsoft next operating system, Windows 10, is fully launched.

Intel has been trying to diversify its business. Its rumored takeover of programmable logic chip maker Altera would have been one of its largest acquisitions, but that deal reportedly fell through due to a price disagreement.


A big chunk of revenue for Intel now comes from these new markets — selling its silicon and services into data centers, Internet of Things and memory business. “Our work if far from done,” said Intel chief financial officer Stacy Smith in the conference call. “But the transformation of the company is well under way.”