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Intel beats Wall Street expectations, server income up

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aintel

SAN FRANCISCO — Intel Corp., the chipmaker that gets more than 80 percent of revenue from the PC market, is forecasting sales that may top some analysts’ estimates as demand for server processors helped make up for a slump in PCs.

Fourth-quarter revenue is expected to be $13.2 billion to $14.2 billion, the company said Tuesday in a statement. That compared with the average analysts’ projection of $14 billion.

Gross margin, or the percentage of sales remaining after deducting production costs, will be about 61 percent, Intel said, in line with estimates.

While Intel’s processors have failed to gain much ground with tablet and smartphone makers, the company has benefited from their popularity because it supplies the main component in nine out of 10 of the server machines that dish out data to mobile devices. In addition, some businesses have started to purchase PCs again, helping to slow the decline of that market.

The company recently announced it would eliminate about 400 jobs at its Rio Rancho chipmaking plant as part of a companywide adjustment.

Demand for servers is being driven by companies such as Facebook, Google and Amazon.com, which are building data centers to meet growing demand for mobile online services.

Intel Corp. reported third-quarter earnings of 58 cents a share on revenue of $13.46 billion Tuesday, beating Wall Street expectations. Analysts had expected the company to report earnings of 53 cents a share on $13.46 billion in revenue, according to a consensus estimate from Thomson Reuters.

“The third quarter came in as expected, with modest growth in a tough environment,” Intel CEO Brian Krzanich said in a news release.

“We’re executing on our strategy to offer an increasingly broad and diverse product portfolio that spans key growth segments, operating systems and form factors. Since August we have introduced more than 40 new products for market segments from the Internet-of-Things to datacenters, with an increasing focus on ultra-mobile devices and 2 in 1 systems.”

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