Intel profit down as data center business stagnates

Intel Corporation reported the decreasement of its revenue on quarterly profit on Tuesday, Oct 13, 2015. As reported on Reuters, the profit falls amidst weak demand for intel's chips used in personal computers. Intel said fall is due to the low growth of the data center business area in 2015.

Intel had been counting on data center business all this time. The Intel's data center group operating segment includes server, network and storage platforms designed for the enterprise, cloud, communications infrastructure and technical computing segments.

The Company's next-generation Intel Xeon processor E5 family platform is used for its 22nm process technology. The 22nm Intel Xeon processors provide performance and power consumption across server, network and storage platforms.

The Company also launched its next-generation Intel Xeon processor E7 family. These products are targeted at platforms requiring four or more CPUs. DCG is engaged to ramp the Intel Xeon Phi coprocessor with 60 or more Intel processor cores.

However, with all the improvement in this area, Intel's data center grows in low double digit compared with its early forecast of about 15 percent growth.

According to Intel's Earnings News Release, Intel corporation reported third-quarter revenue of $14.5 billion, operating income of $4.2 billion, net income of $3.1 billion and EPS of 64 cents. The company generated approximately $5.7 billion in cash from operations, paid dividends of $1.1 billion, and used $1.0 billion to repurchase 36 million shares of stock.

It is reported that the company's net revenue fell to $14.47 billion from $14.55 billion. This net revenue fell below analysts expectations, which the net revenue were expected to reach $14.88 billion.

Revenue from the data center business jumped nearly $4.14 billion in this third-quarter, as increased adoption of cloud services spurred demand for the company's chips.

The data center business of Intel company had grown 19.2 percent in the first quarter, 9.7 percent in the second and 12 percent in the latest quarter. Intel's Earnings News Release showed that the data center group platform increased 7 percent in this third-quarter 2015 compared to second-quarter of this year, and 9 percent compared to third-quarter of 2014 on unit volume.

While Intel data center's average selling prices reported an increase of only 1 percent compared to second-quarter of 2015 and 6 percent compared to last year's third quarter.

While Intel's data center business still shows an increase although not as much as expected, the revenue of company's notebook, desktop, and tablet platform decreased 14% on notebook platform volume compared to second-quarter of this year, or decreased 8% compared to third-quarter of 2014.