Intel targets mid-single digit revenue growth next year

Intel today it expects annual revenue to grow by a mid-single digit percentage next year.

After two years of overall sales declines, the company is forecasting annual revenue to grow 6 percent to roughly $55.8 billion this year.

At the annual investor meeting, Intel CEO Brian Krzanich emphasized that Intel’s highest shareholder value will come from a strategy to utilize the core assets that drive the company’s PC and data center businesses to move into profitable, complementary market segments. Intel’s manufacturing capability, Intel architecture, and the use of shared IP are key elements of the growth strategy.

Intel’s own PC business is on track to grow by 5 percent this year and will dip just slightly next year, said Intel Chief Financial Officer Stacy Smith. The company expects to sell more chips for data center computers and other devices, such as wearables and a wide range of smart appliances.

Intel chairman Andy Bryant said he saw progress in Intel’s strategy of staking out a big chunk of market share in tablets this year by offering manufacturers subsidies to use its chips, Reuters reported.

The Santa Clara, California company said it expects gross margins in 2015 to be 62 percent, plus or minus 2 percentage points. Analysts on average expected 63 percent gross margins for 2015 and 2014.

Intel said capital spending (Capex) next year will be about $10.5 billion compared to about $11 billion expected in 2014.

Intel tabletA global slump in personal computer demand that began with Apple’s launch of the iPad four years ago has stabilized in recent months, in part due to companies replacing employees’ older laptops.

Intel, the world’s dominant maker of microprocessor chips for PCs, has suffered as consumers have increasingly turned to smartphones and tablets that mostly use lower-power chips made by other companies, Bloomberg reported.

It lost more than $1 billion in the mobile chip business last quarter, in part because it pays subsidies to device-makers to encourage broader use of its chips.

Intel was late to mobile and under CEO Brian Krzanich, who took over last year, it has rushed to make its technology more suitable for tablets and smartphones and compete better against Qualcomm, MediaTek and others.

Krzanich said a plan disclosed this week to merge Intel’s mobile unit with its PC group was in line with manufacturing customers that see their own product lineups of smartphones, tablets and laptops merging.

He said Intel was on track to exceed its goal of seeing its chips used in 40 million tablets this year. That strategy made Intel the No 2 tablet chip supplier in the June quarter, according to market research firm Strategy Analytics, but it cost the company billions of dollars in subsidies.

Intel has made much less progress in chips for smartphones.

Baburajan K
[email protected]