US tech firm Intel Corp saw its shares surge by as much as 3.5 percent to $54.08 following the release of its better-than-expected third-quarter revenue and profits. After beating initial analysts' estimates, Intel decided to raise its full-year revenue forecast.
Intel attributed its stellar performance for the third quarter on the increase sales of its products to data centers. The company's performance managed to somewhat ease concerns of the negative effects on Intel's bottom line by the protracted trade dispute between China and the United States.
Over the past few years, Intel CEO Bob Swan has managed to turn around the company's profits and revenues through various measures to decrease spending, shed underperforming businesses, and slow down its investments. Swan's strategy is in contrast with the company's previous heads, which focused more on acquisitions of business outside its core area.
Under Swan, Intel has readjusted its focus on its core markets. The company recently doubled down on markets such as data centers and personal computers, a move that has managed to generate figures that beat analysts' expectations.
According to Intel Chief Financial Officer George Davis, the increase in data center spending was expected. Many of its customers, who had bought chips from the company in late 2018, still took the time to utilize their purchases. This meant that Intel had expected data center spending to surge in the second half of the year.
Davis mentioned in an interview that they were pleasantly surprised by the actual performance of their data center sales. The executive also pointed out that their cloud customers have significantly increased, which should further contribute to better figures in the coming quarters.
In its third-quarter earnings reports, Intel revealed a 4 percent increase in its high-margin data center business to $6.4 billion. The figure managed to exceed initial analysts' estimates of $5.62 billion for the quarter. The company revealed that its net revenues still remained steady at $19.19 billion, higher than initial analysts' estimates of $18.05 billion.
Intel did report a slight dip in its client computing business, which fell by 5 percent to $9.7 billion. However, the figure still slightly exceeded initial analysts' estimates of $9.6 billion.
Based on its current performance, Intel upgraded its fourth-quarter revenue forecast to $19.2 billion, or adjusted earnings of $1.24 per share. This is slightly higher than analysts' fourth-quarter revenue expectations of $18.2 billion and profits of $1.21 per share.
Intel also upgraded its full-year revenue forecast to $71 billion from an earlier forecast of $69.5 billion. The upgraded figure is also well above analysts' estimates of $69.43 billion for the entire year.
