Feeds

Intel treads water despite drowning PC biz clinging to Chipzilla's legs

Good thing there's plenty of margin in mobile kit. Oh, wait

Boost IT visibility and business value

Intel beat analyst expectations on sales and missed on earnings as the world's largest chip designer had trouble tacking into the winds of change that are reshaping the world's tech market.

Full-year revenues in 2013 were $52.7bn, with a gross margin of 59.8 per cent, down slightly on $53.3bn and 62.1 per cent a year ago. Net income fell to $9.6bn from $11bn as Intel was savaged by the lower-margin world of mobile chips, embedded systems and – we reckon – the bulk-buying deals it has with huge cloud operators like Amazon and Google.

Revenues for the chip company's fourth financial quarter of 2013 were $13.8bn compared to $13.5bn in the previous quarter and $13.5bn a year ago, Intel reported on Thursday.

Net income was $2.6bn versus $3bn in the previous quarter and $2.5bn a year ago. Earnings per share were 51 cents.

Financial analysts polled by Yahoo! had expected earnings of $0.52 and revenues of $13.72bn.

"We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago," Intel CEO Brian Krzanich said in a canned statement. "We've built a strong foundation for our business by bringing innovation to the market more quickly across a wide range of computing platforms. For example, at CES, we demonstrated multiple devices that weren't on our roadmap six months ago."

Discerning Reg readers won't be surprised that Intel's mainstay PC division took another walloping, with flat revenues of $8.5bn, compared with $8.4bn the previous quarter and $8.5bn a year ago, given that Intel recently announced it was leaving a new multibillion-dollar chip fabber in Arizona empty due to concerns over the PC market.

Intel's problem is that its main profit-maker – consumer PCs – is now dying, and the company doesn't have a credible foothold in the hand-sized devices that, piranha-like, are dismembering its margin-rich corpse. Last year the world's PC market had its worst year ever due to plummeting sales.

Worse, Intel is now being forced to compete in markets with lower margins, which is causing havoc with its margin. If you're reading this on a phone or a tablet, then there's a significant chance you're running on a platform powered by processor cores licensed from Brit upstart ARM for a pittance, for example.

As usual Intel's data-center division led the way in growth with the bit barn arming group claiming revenues of $3bn, compared with $2.9bn in the previous quarter, and $2.7bn a year ago. We expect that Diane Bryant, GM of Intel's data center group, will arrive back to her office today to find some flowers, tins of calamari, and perhaps an Intel Xeon chip whose logic gates have been replaced with microscopic dollar signs – and for good reason.

Growth in the company's "Other Intel architecture operating segments" – which pulls in strategically important products like chips for mobile devices and embedded systems – pulled in revenues of $1.105bn for the quarter, versus $1.018bn in the same quarter in the previous year. Considering the incredible adoption rates of tablets and mobile devices and Intel's massive tech and marketing developments in this area Intel probably wanted that number to be much higher.

Though Intel has thrown vast sums of money at turning its integrated chip supertanker from designing mass market PC chips to more customizable systems-on-a-chip for a broader range of markets, those changes are not yet showing up in the company's balance sheets. We imagine that internal backers of the corporation's redesign are doing their best impression of Braveheart and shouting "hold, hold!" as the Wall Street moneymen charge towards them with suggestions on how it could change course again.

Intel's shares were trading down 2.7 per cent in after hours trading, at the time of writing. ®

Build a business case: developing custom apps

More from The Register

next story
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.