Intel Chief Executive Brian Krzanich hasn’t provided much evidence of progress in moving beyond the ailing PC market. But at least some new yardsticks will emerge with this afternoon’s first-quarter results.
The big chip maker last week announced plans to break out numbers for some new operating segments, including more detail on chip sales for smartphones and tablets. Intel has been lusting after that large market for years, but sales were lumped in a catchall “other” segment of the income statement that provided few clues.
Another new reporting segment is the so-called Internet of Things, which includes chips for a wide variety of gear like smartwatches, home appliances, computerized signage, office equipment and more.
Not that either segment will move the needle enough in the first quarter to change the big picture, which is likely to show a drop in profits and little growth. Analysts expect per-share earnings of 37 cents on revenue of $12.8 billion, compared with 40 cents on $12.6 billion a year earlier.
Intel report earnings after market close and will hold a conference call at 5 p.m. ET. Here are some key things to watch:
PC Problems Easing? Intel, whose chips reach just about every corner of the globe, has a knack for finding markets where appetites for computers are still expanding. The global decline in PC shipments also seems to have slowed, in part because some companies upgraded systems to replace those running Microsoft‘s outdated Windows XP operating system.
Servers a Savior? Intel’s most lucrative business is in data centers, where its chips command even greater market share than in PCs. The wild cards now include demand for Intel processors in other gear used in computer rooms, such as storage and networking equipment, which could aid revenue in Intel’s data-center group.
Tablet Tax: Krzanich has vowed to get Intel into 40 million tablets this year. But manufacturers that select its main chip for such devices face extra costs associated with circuit boards and other components. So Intel is offering those hardware makers ”contra” revenues, or subsidies, which could end up holding down operating income at Intel’s new mobile and communications segment.
New Things vs. Old Things: Before the Internet of Things became a popular turn of phrase, Intel already sold what it called “embedded” processors for various noncomputing applications. Intel’s new “IoT” segment should appear on its first income statement with sizeable revenues, but those numbers might not tell readers much about newer markets like wearable devices.