Intel Reports Record Revenues on Cloud Burst 

Intel said its datacenter business expanded during 2014 as the chip giant topped analysts' earnings and revenue forecasts.

Intel CEO Brian Krzanich said Intel's annual revenues grew 6 percent during 2014 to a record total of $55.9 billion. Net profits for the year totaled $11.7 billion, the company reported January 15.

Intel's Data Center Group revenue grew at a healthy 18 percent from 2013 to $14.4 billion, making that unit Intel's second-largest revenue generator after its PC Client Group. Meanwhile, the chip maker's Internet of Things (IoT) Group recorded $2.1 billion in annual revenues, a 19 percent jump over the previous year.

Intel said platform volumes for the datacenter unit rose 15 percent on an annual basis while platform average selling prices jumped 10 percent during the same period.

Annual revenues for software and services rose 1 percent year-on-year to $2.2 billion. Intel's saw its mobile and communications sector plummet in 2014 on revenue of $202 million, down 85 percent over the previous year.

Those trends were also reflected in Intel's fourth quarter earnings: datacenter revenue grew 11 percent sequentially to $4.1 billion, which was 25 percent higher than the same quarter last year. Platform volumes grew 5 percent on a quarterly basis while platform average selling prices rose 7 percent, Intel reported.

Meanwhile, quarterly revenues for its IoT Group totaled $591 million, up 12 percent from the previous quarter and 10 percent year-on-year.

Intel had forecast annual datacenter revenue growth in the low-teens, with operating profits growing faster than revenues. "We said we would capitalize on the growth of the cloud and big data by diversifying customer segments," Krzanich said during an earnings call. Along with the 18 percent jump in annual revenues, Intel said operating profits for the datacenter unit grew 31 percent last year.

Intel CFO Stacy Smith said the datacenter unit "benefitted from the build out of the cloud, data analytics and our strong product portfolio" that includes x86 server innards and other cloud infrastructure. The upshot was the datacenter unit outperformed the company's expectations at the beginning of 2014.

Smith said Intel's earnings per share total of $2.31 benefitted from the recent extension of the R&D tax credit. Intel also said it generated $20.4 billion in cash from 2014 operations.

The company's first quarter guidance on revenue, $13.7 billion, roughly the midpoint in the expected range, was short of analysts' expectations. Intel said the forecast was in line with an expected seasonal decline in the first quarter. It is forecasting an annual revenue increase in the "mid-single digits."

Intel's capital expenditures in 2015 are expected to reach about $10 billion.

Meanwhile, Smith noted that Intel "is in a great position to benefit from the build out of the cloud and data analytics as we enter 2015. We expect these trends to drive growth again this year."

Intel rolled out its IoT platform in December, forecasting that it expects 40 billion sensors and 10 billion devices by 2020 along with an estimated 40-fold increase in wireless device connections. While IoT appears to be transitioning from a buzz phrase to a business model, it appears that much of the chip maker's mid-term growth with come from supplying the ingredients to make the x86-based products used in most datacenters.