Intel's Q1 earnings rise despite slow PC market

First quarter earnings at Intel, the world's largest maker of semiconductors, stood slightly higher than the same period a year ago.

According to commentators, the results reflected aggressive cost management as the personal computer market remained weak.

Brian M Krazanich, chief executive, PC market, who spoke to analysts after the earnings were released said, the PC market was expected to remain challenging.

The Santa Clara, California based company had for long struggled with shrinking demand for PCs, as consumers turned to mobile phones and tablets.

However, he noted there were ''600 million PCs out there, growing by the day, that are greater than four years old,'' and Intel executives hoped a new release of Microsoft's PC operating system, scheduled for this summer, would improve demand for his company's chips.

Intel is also banking on continued strong demand for chips used in large computer centres and faster growth in connecting ordinary devices to the internet.

Intel reported that net income was up 3 per cent to $2 billion, as against the year-ago quarter. Intel's per-share income was up 8 per cent, to 41 cents a share, pointing to a smaller number of shares outstanding due to stock buybacks. Revenue remained flat, at $12.8 billion.

Intel executives explained a number of times during the company's earnings call with investors on Tuesday that the shrinking PC market was largely responsible for the company's disappointing quarterly sales of $12.8 billion.

Even with the upcoming summer release of Microsoft's Windows 10 operating system,  Krzanich said the company was ''not currently forecasting a big recovery or boom in the second half'' of this year.

However, according to Intel executives, its data centre group, focusing on  the Internet of Things, would ''offset the decline'' of the PC business. Eventually, data centre group and the company's other emerging units would lift future revenue, they said.

However, those business lines were much smaller than Intel's PC and mobile device group, which accounted for $7.4 billion of the overall $12.8 billion in first quarter sales analysts pointed out.

Intel's data centre group brought in sales at $3.7 billion as against $3.1 billion in the same period a year earlier while its Internet of Things group had $533 million in quarterly sales as against $482 million in the corresponding quarter of 2014.