Intel Corporation Up After Positive Sales Guidance, Dividend Increase

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Intel raised its quarterly dividend Thursday and also announced that it expects revenue growth next year. This news pushed up the chip maker’s stock by over 3%. Intel’s stock is now on track for its biggest gain since late August.

Increased capital spending

For the next year, Intel expects its annual revenue to see a YoY percentage rise in the mid-single digits. This is similar to analysts’ projections and suggests an improvement from this year as Intel has already said it expects a decline of 1% in revenue this year.

In the third quarter, though both profit and revenue were down, the results were better than expected. For 2015, the chip maker expects revenue of $55.31 billion. If this turns out to be true, then it will be the second time in the last three years that its annual revenue sees a decline. Analysts expect 4% growth in Intel’s revenue for 2016.

For 2015, Intel’s capital spending estimate was $7.3 billion, but for the next year, it plans to boost it up to $10 billion. This is inclusive of $1.5 billion in spending on memory products. The chip maker also plans to raise its quarterly dividend from 24 cents to 26 cents.

Intel expects better demand next year

Intel has struggled in recent years due to the shift in consumer preferences from PCs and laptops towards smartphones and tablets. More success has come to the company from the chips it makes for big computers used in corporate data centers and cloud computing operations. Intel CEO Brian Krzanich is hoping that a new family of chips code-named Skylake and the Windows 10 OS will help in pushing up demand for its chips.

“We really see a strong tailwind as we move into 2016,” Krzanich said. And, even if the decline continues in the PC chip business, Intel could grow in the coming year because of the increasing demand for the memory chips and the processors used in servers and varied devices, he  added.

On Thursday, Intel shares closed up 3.44% at $34.30. Year to date, the stock is down by over 5%, while in the last one month, it is up by over 2%. The stock has a 52-week high of $37.90 and a 52-week low of $24.87.

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