Intel Corp, the worlds largest chipmaker, reported a 39% increase in net income during the fourth quarter of 2014, driven by higher demand for server chips and stronger PC sales.
In the quarter ended September 27 Intel reported record revenue of $14.7 billion, up 6% compared to Q4 of 2013. Net income stood at $3.7 billion versus $2.6 billion a year ago, while earnings per share were $0.74 compared to $0.51.
“The fourth quarter was a strong finish to a record year,” said Intel CEO Brian Krzanich. “We met or exceeded several important goals.”
The Santa Clara, California-based companys gross margin also edged up from 62.0% to 65.4% in the recent quarter.
However, Intels mobile and communications unit continued a trend to deliver losses. During the recent three months the business reported an operating loss of $1.1 billion, worse compared to the negative result of $874 million last year.
The performance of the division reflected Intels efforts to gain a larger market share as the company paid consumers to utilize its chips in tablets. Intel, however, exceeded its already optimistic projection to have its processors used in 40 million devices in 2014, and reported it had delivered 46 million chips.
Intels CFO Stacy Smith said that the company plans to aim its effort to reduce costs by $800 in its mobile and communications division, now that it has strong presence in the mobile market, while also boosting revenue. For the full year of 2014 the division reported operating loss of $4.21 billion on a revenue of $202 million.
Meanwhile, revenue from PC client group climbed 3% to $8.9 billion, but down compared to the 9% hike it stated in the third quarter of 2014. Intel still heavily relies on PC chips sales as they accounted for more than half of the companys revenue in the fourth quarter.
Also Intels performance in surprised many analysts. According to a research conducted by Gartner and Barclays, worldwide PC shipments were expected to be weaker in the year-end holiday season. Since Q3 of 2013 demand for personal computers have been declining in favor of mobile devices.
“There is more to do in 2015. We’ll improve our profitability in mobile, and keep Intel focused on the next wave of computing,” said Mr. Krzanich.
Intel estimated revenue for the first quarter of 2015 to range between $13.2 billion and $14.2 billion, while gross margin to stand around 60%. The midpoint of the revenue projection is below Thomson Reuters analysts forecast, including $13.76 billion in revenue and gross margin of 61.2%.
For the full year Intel projected revenue growth of mid-single digits percentage with a gross margin close to 62%. Compared to analysts expectations of 63.4% gross margin and a 4% increase in revenue.
Intel Corp fell 0.44% on Wednesday and closed at $36.19 on NASDAQ, marking a one-year increase of 35.70%. The company is valued at $174.98 billion. On Friday the stock lost 2.49% to $35.29 at 9:17 GMT during after-hours trading.
According to CNN Money, The 40 analysts offering 12-month price forecasts for Intel have a median target of 36.10, with a high estimate of 50.00 and a low estimate of 17.00.
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