Intel warns of slowing data centre growth

October 19, 2016 // 9:51 a.m.

Tags: #3q2016 #brian-krzanich #data-centre #financial #intel #internet-of-things #investors #iot #market-share #shareholders

Intel has lowered its expectations for the data centre market, and while it still predicts growth it has seen its stock drop nearly five percent as a result.

During the earnings call following its third-quarter financial results, Intel's executives warned that its traditionally lucrative data centre division would see growth slow to 'high single digits.' While any growth is good growth, that's below the company's previous projections - it started the year promising investors around 15 percent growth - and its shareholders have taken notice. Since the announcement, Intel's shares have dropped 4.77 percent in pre-market trading, a suggestion of flagging confidence in a company which still holds a 90-some percent market share of the data centre market.

While shareholders may be getting antsy at slowing growth, Intel's results were far from bad news. 'It was an outstanding quarter, and we set a number of new records across the business,' crowed Intel chief executive Brian Krzanich during the earnings call. 'In addition to strong financials, we delivered exciting new technologies while continuing to align our people and products to our strategy. We're executing well, and these results show Intel's continuing transformation to a company that powers the cloud and billions of smart, connected devices.'

Among the highlights of the company's third-quarter financials are a 21 percent quarter-on-quarter and five percent year-on-year growth in client computing revenue, 13 percent quarter-on-quarter and 10 percent year-on-year growth in the data centre group that has investors so concerned, and 20 percent month-on-month and 19 percent year-on-year growth in the company's recently founded Internet of Things (IoT) division. The result: $15.8 billion in revenue, a nine percent year-on-year rise, with a gross margin of 63.3 percent giving an operating income of $4.5 billion - nine percent higher than the same quarter last year.
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