INTC Intel Corporation

By Ted Greenwald 

Intel Corp.'s quarterly profit surged as the chip giant showed no impact from revelations earlier this year of critical security flaws in its processors.

Profit in the first quarter shot up by 50% from a year earlier to $4.45 billion. Revenue rose 9% to $16.07 billion.

Sales in the division responsible for server chips and other data-center gear rose 25%, notching important growth in the highly profitable segment. Intel is leaning on the unit, which typically makes up around one-third of its revenue, as sales of personal computers give way to mobile devices and smart speakers. Sales of data-center equipment to cloud providers grew 45% from a year earlier, while sales to network operators were up more than 30%. Enterprise sales edged up 3%, the company said.

Revenue from the division that sells chips for PCs, which generally makes up more than half of revenue, rose by 3%, despite declining PC shipments in the quarter, according to Gartner Inc.

Intel's shares were up 7.9% to $57.25 after hours, after having risen 3.3% in regular New York trading.

The stock has gained 15% this year, continuing a rally that was touched off after the company reported positive results in the second quarter of 2017.

The chip giant raised its full-year revenue forecast nearly 4% to $67.5 billion, and raised its earnings outlook. It also boosted its operating margin projection to 29% from its prior forecast of 28%.

The quarter's results and raised forecast show "the acceleration of our transformation from a PC-centric company to a data-centric company," Intel finance chief Bob Swan said in an interview.

The positive results came despite the revelation in January of security flaws that afflict a variety of processors, including virtually all the ones Intel made in the past decade. The flaws hit Intel especially hard, as it holds around 95% market share in chips for PCs and servers, according to Mercury Research.

Intel has said the problem would have no material impact on its finances, and that it would fix the vulnerabilities in new chips due this year. The chip maker earlier this month said it had issued firmware updates addressing two of the three known flaws, known as Spectre and Meltdown, for all its affected processors introduced in the last nine years.

Intel's overwhelming dominance in processor chips makes it a target for Advanced Micro Devices Inc., which has been rolling out competitive products for the first time in years, recently shipping its second generation of desktop chips.

AMD reported Wednesday that revenue in its division that sells PC chips ballooned 95% in the first three months of 2018, a sign the business is gaining traction. AMD said profit came to $81 million, compared with a $33 million loss a year ago, while total revenue rose 40%. The company forecast second-quarter revenue up 50%.

Intel scored a coup against its rival, though. Jim Keller, architect of AMD's latest chips who is also heading Tesla's Autopilot system and developing chips for Apple Inc.'s iPhones, is joining Intel as head of hardware engineering. He will be reunited at Intel with Raja Koduri, his partner at AMD and Apple, who joined as chief chip architect in November.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

April 26, 2018 17:23 ET (21:23 GMT)

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