Intel Corporation (NASDAQ:INTC) shares soared yesterday after the chip maker revealed its revenue outlook for 2015, which came in above Wall Street estimates. Along with a better outlook, the chip maker also hiked its dividend. On Thursday, Intel shares closed up 4.66% at $35.95.
Intel ups estimates, dividend
In a press release on Thursday, Intel said that it is expecting revenue to surge by a mid-single digit percentage next year. Analysts were expecting an average increase of 3.4% in revenue for 2015.
Intel is estimating a gross margin of 62% in 2015, plus or minus 2% points. On the other hand, analysts are projecting a 63% gross margin for 2015 and 2014. Capital spending in 2015 is expected to be around $10.5 billion, as against $11 billion expected in 2014, said the company. The chipmaker has also decided to increase its dividend by 6 cents to 96 cents on an annual basis.
During the company’s annual investor day, Chairman Andy Bryant said that the strategy of gaining significant share in the tablet market this year by giving subsidies to manufacturers to power their tablets with Intel chips is bringing results. Bryant said that although he is not satisfied with the company losing money, he is also not embarrassed by the position today in which Intel is compared to where it was last year.
“This is the price you pay for sitting on the sidelines for a number of years and then fighting your way back into the market,” Bryant added
Paying price for entering late
Intel entered the smartphone race late, and CEO Brain Krzanich activated his mobile plans only last year, making efforts to design technology for tablets and smartphones and compete against players like Qualcomm, MediaTek and others.
A few days ago, the Intel CEO unveiled a plan to merge its PC and mobile units. The plan of amalgamating Intel Corp’s mobile unit with its PC group was like the plans of manufacturing customers, which are looking forward to merging their own lineups of smartphones, tablets and laptops.
Krzanich said that the chip maker is making efforts to power at least 40 million tablets with its chips this year. In the June quarter, the strategy helped Intel secure the second spot among all tablet chip suppliers, according to market research firm Strategy Analytics. However, the company had to forgo billions of dollars in subsidies.