Intel earnings reveal weaker chip sales

Overall, Intel reported net income of $3.1 billion on revenue of $14.5 billion, which represented a 6% drop in profits against flat revenues a year ago. Analysts expected revenue of $14.2 billion and and 59 cents per share, which Intel exceeded.

The company’s two main divisions tell the story: Intel’s business is built upon the enterprise first and foremost. Intel’s client computing business reported operating income of $2.43 billion, down 20%, on revenue of $8.08 billion – a 7.5% drop in revenue. Profits at Intel’s cata centre group, however, jumped 9.3% to $3.86 billion, while revenues also jumped 12.3% to $3.86 billion.

Intel, however, pulled off the neat trick of seeing the average selling price of its products jump by 15% in its PC business, while the actual number of chips fell a significant 19% from a year ago. That almost certainly means that Intel is capturing the high end of the PC market, ceding the low-margin value space to AMD. Specifically, notebook chip volumes dropped 14%, while desktop chip volumes fell by 15%. But prices rose 4% and 8%, respectively.

Intel, however, is predicting a rather conservative fourth quarter, expecting revenue of $14.8 billion, give or take $500 million. That’s just a 2% increase from the just-reported third quarter, and relatively flat with the $14.7 billion Intel reported for the fourth quarter of 2014.