CALIFORNIA: Intel’s strong quarterly profit beat was overshadowed by concerns about slowing revenue growth in its highly profitable data centre business, sending its shares down about 5.6 per cent in after-market trading.

Chief Executive Brian Krzanich has looked to weather a slump in demand for chips used in personal computers by focusing on the business of supplying chips for high-end servers. The world’s largest chip-maker reported data centre revenue of USD 4.31 billion in the fourth quarter ended December 26, missing consensus estimate of USD 4.42 billion, according to Jefferies & Co.

Revenue in the business rose only four per cent from the preceding quarter, compared with the eight per cent growth in the third quarter. “I think companies are probably not upgrading their own data centre as they know they are eventually

going to convert to the cloud,” said Kevin Cassidy, an analyst with Stifel Nicolaus. “So they are going to put Band-Aids on their current servers and not upgrade them,” Cassidy said.

In October, Intel had cut its 2015 revenue growth forecast for the data centre business, as companies slash spending due to weak macroeconomic growth. Excluding items, Intel forecast revenue of USD 14.1 billion, plus or minus

USD 500 million for the first quarter ending March. The midpoint of this range is down six per cent from the fourth quarter, the company said.

“While the outlook for the first quarter reflects some caution for overall demand, particularly in China, we continue to expect solid growth in the business in 2016,” Krzanich said on a post-earnings call.

Global personal computer shipments fell 10.6 per cent in the quarter ended in December from a year earlier, IDC said on January 12, the largest decline since the research firm started tracking PC shipments. The fourth quarter of 2015 marked the fifth consecutive quarter of worldwide PC shipments decline, according to rival research firm Gartner.

Intel completed its USD 16.7 billion purchase of programmable-chip maker Altera in December, a deal that adds a new class of products to Intel’s portfolio. The company’s net income fell to USD 3.61 billion from USD 3.66 billion in the fourth quarter. On a per share basis, earnings were flat at 74 cents. Net revenue rose to USD 14.91 billion from USD 14.72 billion. Intel’s shares were down 4.7 percent at USD 31.20 in extended trading on January 14.