Intel's 2017 financial forecast confirms continued high prices

January 27, 2017 | 10:46

Tags: #brian-krzanich #earnings #financial #fy2016 #industry #market #processor #profit #semiconductor

Companies: #altera #intel

Intel has closed its 2016 financial year on its highest-ever quarterly revenue, defying the continued slowdown in the traditional PC market which has been going on for five years straight, and the company predicts higher profits for 2017 - despite the upcoming launch of rival AMD's Ryzen chips.

In the company's latest filing for the fourth quarter of financial year 2016, Intel boasted of $16.4 billion in revenue - up from $14.9 billion for the same period last year - with a total for the year of $59.4 billion, up from $55.4 billion for its 2015 financial year. The additional revenue, though, was offset by increased costs: The company's profit margin slipped from 62.6 percent to a still-healthy 60.9 percent, thanks to a 0.7 point increase to its tax rate and a five percent boost to its spending on research and development and for mergers and acquisitions.

Over the year, Intel's analysis reveals, the bulk of its business units saw growth: The Client Computing Group, responsible for desktop and laptop processors, grew two percent year-on-year; the Data Centre Group, which handles Intel's server products, shot up eight percent; the burgeoning Internet of Things group, though, was the stand-out success with a growth rate of 15 percent over the year. These figures, though, need to take on very important aspect into account: Intel's financial year 2016 was a week longer than 2015, giving the company an extra week to pump up those revenue figures.

'The fourth quarter was a terrific finish to a record-setting and transformative year for Intel. In 2016, we took important steps to accelerate our strategy and refocus our resources while also launching exciting new products, successfully integrating Altera, and investing in growth opportunities,' claimed Intel's Brian Krzanich during the company's earnings call. 'I’m pleased with our 2016 performance and confident in our future.'

For the coming year, anyone hoping to see Intel discounting its products in the face of AMD's upcoming Ryzen launch will be disappointed to hear the company projecting a return to a 62 percent profit margin. The 2017 financial year will also include the divestment of the Intel Security Group, formerly known as McAfee, which in 2016 brought in $2.2 billion of the company's overall revenue.
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