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Intel revises down growth forecast for datacentre business division

Chipmaker Intel blames the weakening macroeconomic situation – with continued delays in hardware refresh cycles – in its datacentre business forecast revision

Intel has revised down the growth forecast for its datacentre business, with the chipmaker blaming the weakening macroeconomic environment.

News of the predicted downturn emerged as Intel announced details of its third-quarter financial results, which saw the firm bank revenue of $14.5bn and net income of $3.1bn during the three months to the end of September 2015.

Intel’s Client Computing Group – which comprises its PC and mobile chip business – accounted for $8.5bn of this revenue, which was down 7% year-on-year, while its datacentre division brought in $4.1bn revenue, up 12% on Q3 2014.

The quarterly results mark a continuation of the wider IT consumption trends that have hit Intel in recent years. This has seen its fortunes hit by the fall in demand for PC and laptops, as enterprises have held off on desktop transformation projects and moved to adopt mobile devices instead.

To offset this, Intel has turned its attention to developing chips for datacentres, positioning itself to benefit from the growing demand for cloud computing and internet of things (IoT) deployments.

However, during a conference call to discuss the results, transcribed by Seeking Alpha, Stacy Smith, enterprise vice-president and CFO of Intel, suggested this strategy may not be playing out as expected, with the firm moving to revise down its datacentre growth forecast.

“We now expect the datacentre business to grow in the low double digits, versus the prior forecast of approximately 15%,” said Smith.

“Relative to our forecast at the beginning of the year, we are seeing a weaker enterprise segment being partially offset by a stronger than expected cloud segment.”

Despite this, Intel was quick to play down this statement is indicative that its long-term strategy is not paying off, but should be attributed instead to macroeconomic factors.

“Our investments and leadership in the datacentre are resulting in strong growth,” said Smith.

“We have a strong and growing memory business, which is well positioned to disrupt the industry with a launch of 3D XPoint technology; and lastly, we are well positioned to benefit in the internet of things market.

“I am not going to go rethink the long-term growth. We are still very confident that we can keep this over the long term, growing at mid-teens level.”

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