Data center growth drives Intel's fourth-quarter revenue, profit beat

By Aishwarya Venugopal

(Reuters) - Intel Corp reported better-than-expected quarterly revenue and profit driven by a stabilizing PC market and growth in its data center business, which offers cloud-based software services.

Revenue from the data center business rose 8.4 percent to $4.67 billion in the fourth quarter, while revenue from its traditional PC business rose 4.3 percent to $9.13 billion.

Intel continues to expect a similar growth rate in the cloud segment, but does not expect an improvement in its enterprise unit, the company said on a call with analysts.

The PC unit includes sales of chips for mobile phones and tablets.

Worldwide PC shipments — which consist of laptops, desktops and workstations — fell by 1.5 percent in the fourth quarter, compared with a 3.9 percent decline in the preceding quarter, according to research firm IDC, continuing the recent trend of stabilizing demand.

"In the data center group, it seems that cloud is still an area of strength, offsetting the weakness in enterprise," Stifel Nicolaus analyst Kevin Cassidy said.

Cassidy added that at some point in the future, the enterprise clients would upgrade their data centers, leading to further growth in the business.

Intel has been building its data center, Internet of Things and automotive businesses, to reduce dependence on the PC market, which has been roiled by users' shift to mobile phones for their computing needs.

The Santa Clara, California-based company's net revenue rose 9.8 percent to $16.37 billion, beating the average analysts' estimate of $15.75 billion, according to Thomson Reuters I/B/E/S.

Excluding items, the company earned 79 cents per share, beating estimates of 74 cents per share.

However, the company said its net income fell to $3.56 billion, or 73 cents per share, for the fourth quarter ended Dec. 31, from $3.61 billion, or 74 cents per share, a year earlier. (http://bit.ly/2k8Eon7)

The company's revenue forecast for the year 2017 was flat, which according to Cassidy, pleased investors as they would rather have conservative estimates for the year, and then have it go up, rather than give aggressive estimates.

Intel said it expects first-quarter revenue of $14.8 billion, plus or minus $500 million. Analysts on average were expecting $14.53 billion.

Shares of the world's largest chipmaker were little changed in extended trading on Thursday.

Up to Thursday's close, Intel's shares had risen 25.5 percent in the last 12 months, falling short of the 60 percent rise in the broader semiconductor index.

(Reporting by Aishwarya Venugopal and Supantha Mukherjee in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)