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Intel Corporation Slumps Despite Earnings, Sales Beat

Intel released its fourth quarter earnings report after closing bell, posting adjusted earnings of 74 cents per share and $14.9 billion in revenue. Analysts had been expecting earnings of 63 cents per share and $14.8 billion in revenue. In the fourth quarter of 2014, the chip maker posted earnings of 74 cents per share and $14.7 billion in revenue.

Intel Corporation Slumps Despite Earnings, Sales Beat

Intel’s earnings by segment

Intel’s Client Computing Group saw a 1% year over year decline and 3% quarter over quarter increase in revenue to $8.8 billion for the fourth quarter. Revenue from the Data Center Group grew 5% from the previous year and 4% sequentially to $4.3 billion, while the Internet of Things Group saw a 6% year over year increase and 8% sequential increase in sales to $625 million.

Software and Services recorded a 3% year over year decline and 2% sequential decline in sales to $543 million, while the Non-Volatile Memory Solution Group’s revenue climbed 10% from the previous year and was flat sequentially.

“Our results for the fourth quarter marked a strong finish to the year and were consistent with expectations,” Intel Chief Executive Brian Krzanich said in a statement. “Our 2015 results demonstrate that Intel is evolving and our strategy is working. This year, we’ll continue to drive growth by powering the infrastructure for an increasingly smart and connected world.”

Intel reported that as of November, 14-nanometer products made up over half of its Client Computing Group volume. The chip maker also described interest in its new Skylake processors as having “growing enthusiasm.”

Intel’s sales guidance beats consensus

Intel closed its acquisition of Altera early in fiscal 2016, so management’s first quarter and full year 2016 guidance includes that business in addition to an extra week in the first quarter because 2016 is a 53-week year. The chip maker recorded acquisition-related charges that were mostly non-cash.

Management expects GAAP revenue for the first fiscal quarter to be around $14 billion and non-GAAP revenue to be around $14.1 billion, +/-$500 million. Consensus estimates suggest revenue of $13.86 billion. The chip maker expects its GAAP gross margin to be 58%, +/- “a couple” percentage points, and the non-GAAP gross margin to be 62%. The consensus estimate for the GAAP gross margin is 61%.

Intel shares tumbled by as much as 3.345 to $31.65 per share in after-hours trading tonight.