Intel expects revenue growth to return in 2016

Despite the underperforming PC market, Intel Corporation managed to raise its outlook for fiscal year 2016, and analysts at Drexel Hamilton have weighed in on the stock following its analysts’ day, reiterating its bullish stance along with a price target of $39. Intel was the biggest gainer among Dow Jones industrial average stocks.

After his remarks, the company issued a forecast calling for revenue growth “in the mid-single digit” percentages in 2016. That’s similar to analyst projections and it represents an improvement from 2015, as Intel expects its revenue to fall about one per cent this year. The projection posts an increase of about $3 billion from the forecast of $7.30 billion for 2015.

Intel is also on track to cut losses by its mobile chip division and expects a reduction of about a $1 billion this year, Smith said. That estimate includes $1.5 billion in spending on memory products.

The decline in the PC market has hit major corporations hard and with a turnaround not expected anytime soon, Intel just like its competitors, has altered its strategy. It’s budgeting about $10 billion for spending on new plants and equipment and raised its quarterly dividend payout by 2 cents a share, the company said in a filing today.

The company also projected better growth for the PC market in 2016 with the introduction of new chips, called Skylake and wider implementation of Microsoft’s new operating system Windows 10. That change has been driven by Intel’s 99 percent market share in server chips and surging demand for the machines from operators of data centers, such as Amazon.com Inc. and Google, which are building up their capacity to provide computing power, storage and services via the Internet.

He described Intel’s Client Computing business as a strong foundation, which delivers healthy profits and critical intellectual property to the rest of Intel. It is moving focus away from PC chip manufacturing to superior computers that operate in corporate data centers to carry out cloud operations. If that holds up, it would be the second time in three years that its annual revenue has fallen.