SANTA CLARA — Buoyed by healthy personal-computer sales, chipmaker Intel on Tuesday reported for the third straight quarter earnings that slightly beat Wall Street’s expectations.
The Santa Clara corporation said it made a $3.3 billion third-quarter profit — up 12 percent from the same period a year ago. Its sales of $14.6 billion represented an 8 percent increase. That worked out to earnings of 66 cents a share.
Analysts surveyed by Thomson Reuters generally had expected fully reported earnings of 64 cents a share on sales of $14.4 billion.
“Overall, we’ve made some good progress this quarter,” Intel CEO Brian Krzanich said during a conference call with analysts. “Our strategy is working.”
But while the PC market appears to have stabilized after two years of sales declines, the long-term prospects for that business remains unclear, said Edward Jones analyst Bill Kreher, and he worried that “Intel’s competitive positioning in tablets continues to be weak.”
Before disclosing its earnings, Intel’s stock price rose 67 cents — or just over 2 percent — to close at $32.14. After the announcement, its shares gained about 2 percent more in early after-hours trading.
The world’s biggest chipmaker in terms of revenue, Intel — which reports its earnings before a number of other big tech companies — has long been regarded as a barometer of the overall industry’s health. Intel gets most of its revenue from selling chips for personal computers, a market it has long dominated. But after rising steadily for years, the company’s sales since 2011 have slowed as many consumers have switched from using PCs to smartphones and tablets.
As a result, Intel has been working hard to get its chips into mobile devices, though that segment remains dominated by firms using an alternative chip design licensed from British company ARM.
Intel also is making a big push to have its chips power the so-called Internet of Things, which includes a huge array of household, retail, industrial, automotive and other gadgets that are being computerized and linked together. In addition, it is exploring using its advanced manufacturing plants to build chips for other companies, including its competitors.
Over the past few quarters, Intel’s sales have been buoyed by an improvement in the PC business. That’s partly because Microsoft ended support for its Windows XP operating system, prompting purchases of newer computers with newer operating systems. In addition, companies have been modernizing their computer equipment after putting off such upgrades for several years.
But many analysts remain skeptical about the future of the PC business and how long Intel can keep milking that cash cow.
While PC sales should stay relatively robust through the rest of this year, “we see limited opportunity for longer-term growth,” Raymond James’ analysts concluded in a recent note to their clients.
Contact Steve Johnson at 408-920-5043. Follow him at Twitter.com/steveatmercnews.
