Intel said Thursday that it expects its fiscal 2016 revenue will grow somewhere in the “mid-single” digits, as the company expects to pour $10 billion in capital into the always expensive business of building ever-smaller chips.
Intel Revenue Outlook Tops Some Analyst Forecasts, Shares Up
The company plans $10 billion in capital expenses. Making smaller, faster chips remains a costly endeavor.
Asa Mathat
According to Yahoo Finance, analysts had been expecting fiscal 2016 revenue to grow to $57.48 billion up from a projected $55.25 billion in 2015, a roughly 4 percent increase.
Investors seemed pleased, sending shares to $34.42, up $1.26 or 3.8 percent.
The financial outlook comes as Intel deals with both a sluggish PC market and its continued struggle to gain ground in the market for mobile phones. The company is hoping a new generation of chips for both markets will help boost its fortunes.
Intel’s forecast, released in a filing with the Securities and Exchange Commission, comes as it hosts an investor day at its Santa Clara, Calif., headquarters.
Among the other metrics Intel released:
- Other spending, as a percentage of revenue, is expected to drop half a percentage point.
- Gross profit margins should be 62 percent, plus or minus a couple points.
- Intel also said it is boosting its annual dividend to $1.04, up eight cents from the prior year.
The analyst event is still taking place. Check back for updates.
Update: While most of the meeting has been unbelievably dull for all but the biggest chip nerds, CFO Stacy Smith livened up his talk by aligning it to five motivational posters. Here are the fun posters, with boring chip talk removed.
Far less fun, though, is the slide comparing the relatively flat PC market that the industry had been estimating heading into 2015 compared to the rather significant decline now seen.
Smith said Intel is also being cautious about its forecast for the PC market next year, projecting a slight decline as compared to current analyst expectations that sales would be roughly flat compared to this year.
On the mobile side, Smith said that the company is on track to exceed its goal of trimming losses by $800 million as the company spends less in the business. Smith said Intel now expects its mobile business to see a $1 billion improvement to the bottom line compared to the prior year.
This article originally appeared on Recode.net.
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