Intel earnings decline on flat revenue

SAN FRANCISCO — Intel beat analysts' expectations in earnings per share for its third quarter, but flat revenue drove down earnings 6%.

The chip maker's revenue was $14.5 billion for the quarter.

Earnings per share were 64 cents, handily beating estimates of 59 cents per share on revenue of $14.22 billion.

But the Santa Clara, Calif.-based company's profit of $3.1 billion was down 6% from $3.3 billion in the same quarter a year ago.

“In an industry that did horribly last quarter, that’s actually pretty good,” said Patrick Moorhead, president of Moor Insights and Strategy in Austin, Texas.

Intel (INTC) stock rose 0.06% in after-hours trading.

“We executed well in the third quarter and delivered solid results in a challenging economic environment,” Intel CEO Brian Krzanich said.

A bright spot were sales from Intel's Data Center Group, which include semiconductors used in data servers and for cloud computing.

That group's revenue was $4.1 billion, up 8% sequentially and up 12% year-over-year.

That double-digit growth "is big — that is what helped offset the softness in PC revenue," said Moorhead.

Intel virtually controls the market for PC server microprocessors, used in data storage and cloud storage. According to IDC, Intel had 99.3% of the market for these processors in the second quarter of 2015.

The Data Center Group represents a growing market and “the largest part of Intel’s profits these days,” said Mark Hung, lead Intel analyst for market researcher Gartner..

Revenue from Intel's Client Computing Group, which includes chips for PCs, was $8.5 billion, up 13% sequentially from last quarter but down 7% year over year.

Intel had set lowered expectations during its previous earnings call in July, when its guidance was that 2015 full year revenue would be down approximately 1%.

Ongoing weakness in the PC market have affected sales of Intel's chips.

Researcher IDC predicts PC shipments will fall 8.7% in 2015, with no stabilization in sight until  2017.

Gartner reported last week that worldwide PC shipments have fallen 7.7% compared with the third quarter of 2014.

This is in part because of the rise of tablets and smart phones, but also because of the high value of the U.S. dollar that depresses international sales.

Krzanich was optimistic.

“Despite ongoing macroeconomic headwinds, there are signs that the PC market is beginning to stabilize,” he said.

Follow USA TODAY tech reporter Elizabeth Weise on Twitter: @eweise.