![]() REUTERS: Intel Corp forecast current-quarter profit and revenue above estimates and raised its full-year revenue forecast on Thursday (Jul 25), allaying concerns about a global semiconductor sales slowdown and curbs on US sales to Huawei Technologies Co Ltd. Intel shares rose 4.9 per cent to US$54.70 in extended trading. The chip industry is in a slowdown, with research firm Gartner forecasting a drop in global semiconductor revenue to 9.6 per cent to US$429 billion in 2019. Chipmakers have also been hit by US-China trade tensions, including tariffs on some products and restrictions on sales to Huawei. But both factors did not trouble Intel, which was the second chipmaker this week to beat analysts' earnings estimates. On Tuesday, Texas Instruments Inc was the first, saying US-China trade tensions did not hamper its ability to conduct business in China. Intel's Chief Financial Officer George Davis told Reuters it had resumed some product sales to Huawei that comply with U.S. regulations, and that tariff threats between the United States and China actually helped second-quarter sales. "Customers concerned about supply risk in the second half of the year related to those items pulled in some demand into the second quarter," Davis said in an interview. "It isn't a net add to the full year (forecast), but it certainly de-risks some of the full year." Intel reported second-quarter revenue of US$16.5 billion and adjusted earnings of US$1.06 per share. Analysts on average had expected revenue of US$15.7 billion and adjusted earnings of 89 cents per share, according to IBES data from Refinitiv. But it was the company's forecast that drove up shares, with revenue and profit expected to be US$18 billion and US$1.24 per share for the third quarter, above analysts' estimate of US$17.72 billion and US$1.16 per share. The company estimated 2019 revenue of US$69.5 billion, instead of the US$69 billion it told investors to expect in April. Intel also said it planned to sell the majority of its modem business, including 2,200 employees and a trove of patents, to Apple Inc for US$1 billion. Davis told Reuters the payment was all cash. Intel will retain the rights to make non-smartphone modems for self-driving cars and PCs under the deal. After years of acquisitions outside its core area of processing chips under previous leaders, Chief Executive Bob Swan has set a goal of becoming more disciplined about spending, slowing investments in areas like memory chips and shedding struggling businesses. Dan Ives of Wedbush Securities said the sales were a step in the right direction. "We believe further divestitures of non-core businesses would certainly make (Intel) look more attractive, while allowing management to more closely focus on improving core operations increasing the likelihood of future execution, but we are not yet convinced management will move in this direction," he said in a note. Revenue in Intel's client computing business, which caters to PC makers and remains the biggest contributor to sales, rose to US$8.84 billion, beating FactSet estimates of US$8.13 billion. Revenue from its higher-margin data centre business rose to US$4.98 billion, above estimates of US$4.89 billion according to FactSet. Intel, the biggest provider of processor chips for PCs for decades, has come to count on data centre chips for most of its revenue growth. The company estimated a US$500 million after-tax gain from the sale of the modem business. Net income fell to US$4.2 billion, or 92 cents per share, in the second quarter, from US$5 billion, or US$1.05 per share, a year earlier. Net revenue fell 3% to US$16.5 billion. Read More Intel says customers stockpiling chips on US-China tension, raises forecast - CNA : https://ift.tt/2Yg7bq4
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