Intel Shares Drop Following Miss on Key Segment

Late Thursday Intel posted its quarterly earnings that exceeded expectations on Wall Street, but its revenue for the three-month period and a key data center group came up short of Wall Street estimates.

The tech company posted earnings for its fiscal fourth quarter of 66 cents per share in comparison to last year during the same quarter of 54 cents per share.

Revenue during the quarter was slightly less that Wall Street estimates ending at $14.8 billion versus the same quarter last year of $13.8 billion.

Shares of Intel on the news were down more than 3% in trading after hours on Thursday, but bounced back on Friday.

Analysts were expecting Intel to post 65 cents per share earnings and revenue of more than $14.8 billion.

The company posted revenue of $4.2 billion in its data center group, which missed expectations by analysts of $4.34 billion.

CEO Brian Krzanich announced that he expected profit margins would be lower for its data center segment during an investor’s meeting two months ago.

That statement was said one day after the CEO visited the White House then announced his plan to make an investment of $7 billion to build a factory in Arizona that will have 3,000 employees.

During the earnings call on Thursday, Krzanich said first quarters tend to be the lowest in general, for output, growth and overall revenue in its data center segment.

Intel has been shifting focus to its Internet of Things and to the data center group, which makes chips for big computers, to shift away from a reliance on the dropping PC business.

Recently the company announced it reached an agreement to acquire Mobileye for $15.3 billion for the tech company’s expertise in computer vision.

The company surpassed expectations for revenue for the Internet of Things unit posting $721 million for the three months, an increase of 11% over the same period one year ago. Analysts were expecting revenue of $714 million for that segment.

Revenue was reported by Intel for the client computing group that beat Wall Street expectations with $8 billion which was an increase of 6% over last year’s same quarter.

Analysts were expecting revenue of $7.95 billion in that segment.

The giant of chip making raised its per share guidance for the full year to $2.86 which increased its previous estimate by 5 cents.

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