Intel Corporation (NASDAQ:INTC) has posted weak third quarter results, but revenue, margins and earnings per share improved sequentially for the chip maker. Intel Corporation recorded an increase in sales of data center chips like servers and storage, which balanced the decline in PC unit sales and PC consumer demand in the emerging markets, according to a report from Indigo equity research by analyst N. Landell-Mills.
Intel sales to rise, but marginall
Analysts believe that Intel Corporation (NASDAQ:INTC) has “passed a bottom,” and expect sales to increase again, though marginally, in the fourth quarter and thus have increased their fundamental valuation, but the upside is very limited.
Analysts note that Broadwell 14 nm chip production was behind schedule, and is now postponed to the first quarter of 2014. Intel Corporation (NASDAQ:INTC)’s revenue for the third quarter was flat and the EBIT margin came down 2.6% to 26.0%. Earnings per share were recorded at $0.50, which is a drop of 13.3%. GAAP earnings per share was flat at $0.58, which includes a $0.4 billion gain on sale of its Clearwire Corp (NASDAQ:CLWR) stake.
Flat numbers for 3Q
For the third quarter, revenue came in flat at $13.5 billion driven by PC clients -$246 million which is a decline of -3%. Data Centre’s $258 million, an increase of 10% and others contributed $14 million, an increase of 1%. Gross profit for the company was $8.4 billion, which is a decline by $101 million or -1.2%. Gross margin declined 0.9% to 62.4%. Intel had an EBIT of $3.5 billion down by $0.3 billion.
Net income for the company came in at $2.6 billion, a drop of $0.4 billion, which was affected by a 3% rise in the tax rate to 28%.
New chips for mobile devices
Intel Corporation (NASDAQ:INTC) recently launched a line of ultra-small 22nm chips called Quark, used in wearable devices. Intel, the largest chipmaker, operates in a fiercely competitive industry that requires massive amount of capital. Intel largely depends on the performance of the PC market as it is the core revenue generator for the company, and the concern is that this market is shrinking rapidly in the wake of a consumer demand shift from PCs to tablets and mobile phones. However, with the launch of recent chips for mobile devices, Intel plans to regain its lost glory.