Intel Corp. said Thursday its profit rose 34% despite increasing competition in its core markets of supplying chips for personal computers and corporate servers.
Profit in the third quarter was $4.52 billion, up from $3.38 billion a year earlier. Revenue rose 2% to $16.1 billion, topping Wall Street's estimates.
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The company also lifted its outlook for the full year, forecasting adjusted earnings of $3.25 per share on $62 billion in sales. Earlier it had expected $3 per share on $61.3 billion in sales.
Intel's division responsible for personal-computer chips, which brings in more than half of the company's revenue, was unchanged from a year earlier at $8.9 billion. The unit that sells chips for servers that drive internet companies and communications providers -- a market central to Intel's future as PCs fade -- reported revenue up 7% from a year ago. That growth rate keeps the server division on track to fulfill Intel's growth target of high single digits for the year.
"We've been in a massive transformation to leverage our core competencies and expand them into a much larger market that's growing faster than our historical market, and we believe we're well positioned to capitalize on that," Robert Swan, Intel's finance chief, said in an interview. "It's essential that we execute on the things that matter going forward."
Intel's shares were little changed at $41.36 after hours, after gaining 1.4% during Thursday trading in New York. The stock has risen roughly 15% between Intel's last earnings report and Thursday's close, after stagnating over the previous year.
Intel's dominant position in the roughly $31 billion global market for PC chips -- it holds a 92% share, according to Mercury Research -- has left it with little room for revenue growth even as rivalries with other chip makers heat up. In the $16.5 billion world-wide market for server processors, Intel holds nearly 100%, according to Mercury.
For the first time in years, Intel faces competition on both the PC and server fronts. Advanced Micro Devices Inc. has introduced new chips, with more to come, priced to undermine Intel's hold on high-performance desktops and the lower end of the server market. However, those chips are still making their way into the market.
Intel has responded by pouring money into improved manufacturing methods and investing in new areas such as artificial intelligence, autonomous driving and memory chips, where it sees potential for growth. The company's $15.3 billion acquisition of Mobileye NV, whose chips help power automated driving features, closed in the quarter, and it said earlier in the month that new artificial intelligence chips would reach some customers by the end of the year..
Intel reported per-share earnings of $1.01 on an adjusted basis, which excludes items such as restructuring and acquisition-related costs. Analysts surveyed by Thomson Reuters had expected adjusted earnings of 80 cents a share on $15.73 billion in revenue.
Write to Ted Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
October 26, 2017 17:03 ET (21:03 GMT)