The world’s largest semiconductor maker yesterday raised its second-quarter revenue forecast and said annual sales will increase for the first time since 2011, buoyed by improving business demand for personal computers.
The higher forecast provides another hint of optimism in the PC industry, where Intel gets most of its revenue, after two straight years of declining global shipments.
Even as consumers shun PCs in favour of mobile devices, demand for Intel’s microprocessors is getting a lift as companies replace aging computer systems, said Ian Ing, an analyst at MKM Partners.
“In the short-to-medium term it looks like the market has stabilised, and business and corporate PCs are driving a lot of strength,” said Ing, who has the equivalent of a hold rating on Intel stock.
Sales this quarter will be $13.7bn (€10.1bn), plus or minus $300m, compared with an earlier projection of about $13bn, plus or minus $500m, Intel said in a statement. It also said it now projects some growth in sales for the year, compared with a previous forecast for revenue to be little changed.
Gross margin will be about 64% in the current period. That’s 1 percentage point higher than the company’s prior prediction. Intel cited higher PC unit volume for the increase in profitability. The company said it will report second-quarter earnings and update margin projections for 2014 on July 15.
Analysts on average had estimated Intel’s sales would rise 2% this quarter to $13bn, from $12.8bn a year earlier, accordingto data compiled by Bloomberg. Revenue for 2014 on average was predicted to be $53.1bn. Intel’s last annual sales growth was the 24% gain it posted in 2011, when revenue was $54bn.
Earlier this month, market-research firm IDC estimated worldwide PC shipments will decline 6% this year, and said the drop may persist through at least 2018 as consumers increasingly opt for Internet-ready smartphones and tablets instead of desktops and laptops.
The researcher also said one bright spot for 2014 has been corporate demand, driven by replacements of computers using Microsoft’s Windows XP.
To cope with the erosion of PC demand, Krzanich has made Intel’s mobile chip business a priority, though it has yet to make much headway.