Intel’s net income rose by 6.4 percent while revenue climbed by 2.4 percent, but the company is still on tepid ground.
Intel’s fourth quarter earnings results were “solid” according to CEO Brian Krzanich, but investors have shown they think otherwise as the stock slid in after hours trading on news that the company had once again missed its earnings targets.
Intel reported Thursday that it earned 2.63 billion in its fourth quarter, or 51 cents a share, up from $2.47 billion in earnings from the same quarter last year. Revenues rose to $13.83 billion from $13.48 billion.
These aren’t the earnings that Wall Street was hoping for. According to a poll conducted by Yahoo Finance, analysts were hoping for earnings of 52 cents a share. Intel’s revenue did beat analyst expectations of $13.72 billion.
“We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago,” said Intel chief executive Brian Krzanich in a statement. “We’ve built a strong foundation for our business by bringing innovation to the market more quickly across a wide range of computing platforms.”
While Intel wasn’t likely expecting a resurgent PC market this quarter, what’s concerning many is that the company’s healthiest market — servers and data centers — had a poor quarter. This high margin segment of Intel’s business only had a one percent increase in sales. Revenue from this unit increased by eight percent, while average selling prices rose by seven percent.
This downtick in server sales was likely caused by uncertainty in the corporate sector from political instability in the US during the government shutdown, thus corporations exercised restraint in making capital purchases.
Intel is setting itself up for a tough 2014. Though its Atom chips were the SoC of choice for Asus’s upcoming PadFone line announced at CES, it’s uncertain whether these phones will be a commercial success. Even in its home market of the Asia Pacific, Asus’ phones have trailed behind heavyweights such as Samsung, Apple, HTC and Xiaomi. The company’s CES keynote was also uninspiring, with its Edison processor — geared at wearable device makers — launching without any notable hardware wins or critical support.
It’s also questionable as to whether Intel can count on Atom to boost its overall outlook, as revenue from the mobile focused processor is counted under its massive PC client group.
Intel is currently trading at $26.54 on the NASDAQ.
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