Intel’s data center business misses estimates, shares fall

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(Reuters) – Intel Corp (INTC.O) missed analysts’ estimates for its closely watched data center business on Thursday as it faced stiff competition from rival Advanced Micro Devices Inc (AMD.O), sending its shares down 3 percent in extended trading.

The Intel logo is shown at E3, the world’s largest video game industry convention in Los Angeles, California, U.S. June 12, 2018. REUTERS/Mike Blake

Revenue from Intel’s higher-margin data center business rose 26.9 percent to $5.55 billion in the second quarter, but analysts had been expecting revenue of $5.63 billion, according to financial and data analytics firm FactSet.

AMD, which has been gaining ground over its larger rival with its new server chips, beat estimates for quarterly profit and revenue on Wednesday, powered by its EPYC server processors.

Intel’s net income rose to $5.01 billion, or $1.05 per share, in the second quarter ended June 30 from $2.81 billion, or 58 cents per share, a year earlier.

Excluding items, the company earned $1.04 per share, beating expectations of 96 cents per share, according to Thomson Reuters I/B/E/S.

The company benefited from a stabilizing PC market, where worldwide PC shipments grew for the first time in six years, according to research firm Gartner.

Revenue in Intel’s client computing business, which caters to PC makers and is still the biggest contributor to sales, rose 6.3 percent to $8.73 billion, beating FactSet estimates of $8.48 billion.

Intel forecast current-quarter revenue of $18.1 billion, plus or minus $500 million, and adjusted earnings of $1.15 per share, plus or minus 5 cents.

Analysts on average were expecting revenue of $17.60 billion and a profit of $1.08 per share, according to Thomson Reuters I/B/E/S.

Net revenue rose 14.9 percent to $16.96 billion, above estimates of $16.77 billion.

The company is in the midst of a CEO search following the ouster of Brian Krzanich last month after an investigation found he had a consensual relationship with an employee in breach of company policy.

Chief Financial Officer Robert Swan is currently acting as its interim CEO.

Shares in the Santa Clara, California-based chipmaker which have gained 13 percent so far this year, were last down 2.7 percent at $50.75 after the bell on Thursday.

Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; Editing by Anil D’Silva