Intel weathers PC decline in earnings report – USA TODAY
Chip-maker Intel saw trading rise slightly despite its report Tuesday that net income fell 5% in the first quarter, with spending on its data center and tablet processors buoying optimism.
Shares traded rose nearly 3% after Intel’s earnings announcement; company stock closed Tuesday at $26.77, near its 52-week high of $27.12, with trading up slightly. Intel’s first-quarter performance of earnings per share of 38 cents, came in one cent higher than analysts expectations; its revenue of $12.8 billion matched expectations.
Quarterly revenue was down 1% from last year, but down 8% from the previous quarter. The company expects second-quarter income of $13 billion, a slight increase over first-quarter earnings and full-year revenue to be flat.
After dominating the PC industry for decades, Intel is looking to advance its mobile and Net devices strategies. “In the first quarter we saw solid growth in the data center, signs of improvement in the PC business, and we shipped 5 million tablet processors, making strong progress on our goal of 40 million tablets for 2014,” Intel CEO Brian Krzanich said in a statement.
The company is also looking to tap into the move towards a Big Data-cloud platform and the Internet of Things movement — the connection of all types of wearable devices and appliances to the Net. “We demonstrated our further commitment to grow in the enterprise with a strategic technology and business collaboration with Cloudera, we introduced our second-generation LTE platform with CAT6 and other advanced features, and we shipped our first Quark products for the Internet of Things,” Krzanich said.
Global worldwide shipments of PCs have continued to fall, down about 1.7% in the first quarter of 2013, according to research firm Gartner. Still, chips for PCs continue to be the majority of Intel’s business, accounting for $7.9 billion in revenue, down 8% from the previous quarter — and down 1% from last year.
Meanwhile, Data Center revenue of $3.1 billion, fell 5% from last quarter, but rose 11% from the previous year. Internet of Things revenue accounted for $482 million, while mobile communications accounted for $156 million.
RBC Capital Markets analyst Doug Freedman found some good news in Intel’s report in that the company made more on the chips they sell and sold 1% more PC processors despite a declining PC market. “So Intel must have gained market share or they sold processors ahead of market growth,” he said.
As for the Internet of Things and mobile strategies, he said “they are nice and exciting, but they are just too small for a company Intel’s size.”
Recently at the Mobile World Congress, Intel did announce multiyear deals to supply chips for smartphones and tablets for makers including Asus, Dell, Foxconn and Lenovo. “The pace inside our company is accelerating,” Krzanich said in a teleconference with analysts Tuesday afternoon. “We have made a lot of changes (but) we have more work to do.”
In January, Intel announced plans to cut about 5,000 jobs globally and sold its Intel Media cloud TV technology to Verizon.