Intel Corporation (NASDAQ:INTC), which revealed earnings yesterday, believe that the darkest days of the PC industry are over, which was experiencing a decline in the wake of a mobile revolution. The shares of the chip maker surged 4% after-hours owing to a higher forecast for the third-quarter revenue than the Wall Street’s numbers.
Intel betting on PC revival
Intel’s Chief Financial Officer Stacy Smith told Reuters, “PCs have stabilized” and that he is anticipating the demand from China and other developing markets to rise coinciding with the recent performance of the United States. Fuelled by the PC market recovery, the chipmaker is expecting that full year revenue will rise 5%, marginally higher than the previous forecast.
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Investors have shown a great deal of confidence in the company’s such as Microsoft Corporation (NASDAQ:MSFT) and Intel, fuelling shares to decade highs as they are under the impression that the decline which started after the launch of iPad has now bottomed out. The annual global PC shipment dropped 12% from 2010 to 2013, the time period during, when Apple iPad took the world by storm.
Intel CEO, Brain Krzanich told analysts, during the conference call, that the upgrade of PCs in the organization will last through the end of 2014.
No major progress in mobile segment
Third-quarter revenue is guided to come in around $14.4 billion. On average, analysts are estimating the revenue to come in at $14 billion. Revenue at Intel PC group surged 6% in the quarter and data center group, a major contributor to gross margin, saw revenue growth of 19%
There is no substantial advancement made by the company in transforming itself from PC industry to smartphones and tablets. Mobile and communication group revenue declined 83% to $51 million and suffered an operating loss of $1.12 billion. In the second-quarter, the company posted revenue of $13.8 billion, compared to $12.8 billion in the corresponding quarter of the previous year. The second quarter net income came in at $2.8 billion, or 55 cents per share.
Intel increased its buyback program by $20 billion. For the running quarter, the company will repurchase shares worth $4 billion, which reflects the confidence management has on turnaround.
“My presumption would be that if they’re confident enough to boost it that they see this (PC market) upside maintaining,” Bernstein analyst Stacy Rasgon said. “God help them if they’re wrong.”