IoT and data centres lead Intel's success in Q4 2016
The company's overall profits fell for the year, but sales were up
Intel has reported a 10% drop in profit overall in 2016, although the company's data centre and IoT efforts helped soften the blow, with record revenues in both sectors.
The reduction in profit is in contrast to revenue growth of 7%, with the company blaming capital expenditure for its reduced the positive outlook.
The Intel's Data Centre Group (DCG) revenues came in at $4.5 billion (3.58 billion), a 10% year-on-year increase, while IoT accounted for $689 million (548 million), which reflected growth of 19% year-on-year.
"The fourth quarter was a terrific finish to a record-setting and transformative year for Intel," Brian Krzanich, Intel's CEO. said. "In 2016, we took important steps to accelerate our strategy and refocus our resources while also launching exciting new products, successfully integrating Altera, and investing in growth opportunities."
He added that the positive results in the cloud sector were a result of the company shifting focus to embrace digital transformation in the enterprise, which the company said was a huge milestone in the company's history.
"We're executing well, and these results show Intel's continuing transformation to a company that powers the cloud and billions of smart, connected devices," Krzanich said in his statement.
"Setting a more reasonable target, management expects DCG (Data Centre Group) revenue to increase by a HSD in 2017, but believes there are opportunities for future DD growth," Analyst N. Quinn Bolton told Street Insider.
"Though we continue to be disappointed in the Enterprise segment, we note all other DCG segments are growing at or above expectations and now account for the majority of DCG revenue."
PC sales continued to decline, as is the case across the board, although its PC-chip business contributed double digit profit growth. "In 2017 and beyond, we expect server revenue to offset declines on the PC side," analyst Bill Kreher told The Australian.
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