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Despite an upbeat sales growth as seen in Intel Corp’s quarterly report, fourth quarter sales dropped by 1.4% as the company allocated more spending in the microprocessor business, personal computers, and giant data center servers.

The company’s focus on the mentioned sectors led their overall capital spending for 2016 to increase by 31% to $9.6 billion. Intel Corp also announced that they are to increase investment in the following sectors this year by $12 billion in line with their transitioning to the production of chips with much finer circuitry and another spending in new memory technologies with higher performance and autonomous vehicle technology.

Q4 Overview

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For 2016’s fourth quarter, the Santa Clara California-based company reported earnings of 73 cents per share and overall earnings of $3.6 billion compared to last year’s fourth quarter of 74 cents per share or $3.6 billion. Analysts also expected an EPS of 74 cents and $15.75 billion in revenue.

Intel Corp chief executive Brian Krzanich stated in a release that the last quarter of 2016 was the perfect end for the year as the company transitioned into more advanced technologies.

“In 2016, we took important steps to accelerate our strategy and refocus our resources while also launching exciting new products, successfully integrating Altera and investing in growth opportunities.” added Krzanich.

Intel corp reported a revenue of $16.4 billion during the quarter compared to last year’s revenue of $14.9 billion. The company’s net income for one-time items reached at around $3.9 billion or 79 cents per share higher than the previous year’s 76 cents per share or a net income of $3.7 billion. According to the company, client computing group revenue advanced by 4% to $9.1 billion during the quarter from consensus estimates of $8.6 billion.

Aside from the earnings report, the company also issued a profit guidance for the year with revenues at $59.4 billion missing analysts estimates of $60.9 billion for the year 2017.

Shares Overview

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On the release of the earnings report, Intel shares surged up by as much as 89 cents or 2.3% at around $38.45 before it closed lower during the day 0.6% lower at $37.57 from opening at $37.78.

Investment-banking firm initially issued a forecast for the tech company stating that Intel shares are to rally by as much as 16% this year, the mostly flat earnings report, however has led to a weaker rally in their shares.

Intel shares for the fourth quarter of 2016 have rallied from trading at around $33 to now hitting as high as $37.04 1 in December due to the strong holiday sales of their products before it declined at the beginning of January as the markets awaited the earnings report.

Intel chief executive said in a statement that the fourth quarter of 2016 was a good end to their year as sales from their desktop and laptop processors surged up by 7% compared to the same quarter from the previous year. The company’s cloud business also boomed by 24% while their communications service business rose up by 19%. The company also received an increased demand in their processors used in car productions.

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