Intel Data Center Sales Surge


Intel Corp on Thursday gave a bullish forecast and blew past Wall Street expectations for the fourth quarter on the strength of data center sales, the business it sees as key to its transformation from a PC supplier.


Intel stock rose 3.8% to $47.06, boosted by a 10% dividend hike and the forecast, which signaled that Intel is succeeding in containing fallout from recently disclosed security flaws that could allow hackers to steal data from computers, Reuters reported.

Those flaws, dubbed Spectre and Meltdown, created global concern among technology users, and Intel acknowledged on Thursday, for the first time, that the fallout could hurt future results. But Intel executives consistently indicated that they did not expect that to happen.

Software fixes for the problems would be succeeded by solutions designed into Intel chips themselves later this year, Chief Executive Brian Krzanich said on a conference call.

In an interview ahead of Intel’s earnings call with investors, Chief Financial Officer Bob Swan said the company sees no “meaningful impact” on corporate earnings from the vulnerabilities.

“They had all these bullets flying at them with these chip flaws, but when I look at these numbers, it’s a blowout across all metrics,” said Daniel Morgan, a fund manager with Synovus Trust, which holds Intel shares. “That makes it a bulletproof quarter.”

Revenue from the company’s higher-margin data center business rose about 20% to $5.58 billion, beating the average analyst estimate of $5.13 billion, according to Thomson Reuters. Investors had targeted 10% growth, said Kevin Cassidy, an analyst at Stifel.

“Data center group is one of the key metrics we are watching. It’s certainly a positive to see that turn up,” said Peter Karazeris, an analyst Intel investor Thrivent Financial.

Revenue from Intel’s PC group hit $9 billion for the quarter, a 2% decline from the year before, but ticked up 3% for the year to $34 billion.