Intel Reports That Data Centre Business May Grow Less Than Expected

October 14th, 2015: Intel Corporation cuts down on its revenue growth forecast as the world’s biggest chipmaker for data centers as businesses reduce investment due to weak macroeconomic growth. The shares of the company reversed course to 3.8% after the forecast on Tuesday.

Because of the falling demand for chips, Intel’s biggest source of revenue, they had been counting on data centers for their revenue generation. The company revealed that growth in “low double digits” in data centers business this year was well expected as compared to the growth in the previous year which was 15%.

The company had agreed to takeover Altera Corp. in June with an investment of $16.7 billion to increase its line-up for higher-margin chips used in data centers. The company’s second biggest business had grown 19.2% in the first quarter, 9.7% in second and 12% in the last quarter.

What took away shine from the company’s better-than-expected profits and high revenue was the data centre forecast. Not only revenue, the company also had to cut down on its capital expenditure for the third time to $7.3 billion plus or $500 million minus. Earlier, the expected capital expenditure was $7.7 billion plus to $500 million minus. The worldwide shipments for personal computers fell to 7.7% in the third quarter. All-in-all, Intel’s net income fell to 64 cents per share a year.

Net revenue decline at Intel was $14.47 billion from $14.55 billion, beating analysis’s estimate of $14.22 billion.

On Tuesday, Intel’s stock had fallen 11.7% this year, more than 9.4% fall in broader semiconductor index.