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Intel has reported record full-year revenue and record fourth quarter revenue in its datacentre group – but failed to impress investors.
Shares fell around 5% in after-hours trading, which analysts attributed to the fact that Intel’s fourth quarter datacentre revenue of $4.31bn missed forecasts of $4.42bn.
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In October 2015, Intel revised down the growth forecast for its datacentre business, blaming the weakening macroeconomic environment.
Although revenue for the datacentre business was up 5% compared with the same period a year ago, and grew 4% compared with the previous quarter, investors were disappointed with what constituted half the growth the business achieved in the third quarter.
The datacentre business posted annual revenue of $16.0bn, which was up 11% from 2014.
But analysts said investors were looking to the datacentre business, particularly in the fourth quarter, to make up for the fall in demand for client computing (PC) chips as the PC market declined.
To offset this, Intel has turned its attention to developing chips for datacentres and drones to benefit from the growing demand for cloud computing and internet of things (IoT) deployments, and the expected growth in the drone market.
This trend was reflected in Intel’s own client computing business, which declined 8% compared with the previous year, while the fourth quarter was down 1% compared with the same period a year ago.
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Analysts said Intel's better-than-expected fourth quarter profit of $3.6bn failed to ease concerns about its core client computing business.
However, fourth quarter profit was down 1% compared with the same period the year before, and the annual profit of 11.4bn was down 2% compared with the previous year.
Annual revenue of $55.4bn was down 1% compared with the previous year, while fourth quarter revenue $14.9bn was up 1% compared with same period the year before.
Intel reported record annual revenues for its IoT and non-volatile memory solutions groups, and record quarterly revenue for its IoT group.
The IoT group posted full-year revenue of $2.3bn, up 7% from 2014; and quarterly revenue of $625m, up 8% compared with the third quarter and up 6% compared with the same period the year before.
Annual revenue for the non-volatile memory solution group was up 21% from 2014, but was flat compared with the previous quarter and up 10% compared with the same period the year before.
"Our results for the fourth quarter marked a strong finish to the year and were consistent with expectations," said Brian Krzanich, Intel CEO.
"Our 2015 results demonstrate that Intel is evolving and our strategy is working.”
Looking ahead, Intel expects revenue of $14.1bn, ±$500m, for the first quarter of 2016.
“This year, we'll continue to drive growth by powering the infrastructure for an increasingly smart and connected world,” said Krzanich in a post-earnings call.
"While the outlook for the first quarter reflects some caution for overall demand, particularly in China, we continue to expect solid growth in the business in 2016."