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Intel hits record profits, bets heavily on Ultrabooks

Intel hits record profits, bets heavily on Ultrabooks

Intel's Paul Otellini boasted of record profits, while claiming that Android and Ultrabooks are the company's future.

Intel chief executive and president Paul Otellini has given his company's investors plenty to smile about in his latest earnings announcement, boasting 24 per cent revenue growth while profit grew 13 per cent for the year to a whopping $12.9 billion

'2011 was an exceptional year for Intel,' boasted Otellini during his regular earnings call with analysts and investors. 'With outstanding execution the company performed superbly, growing revenue by more than $10 billion and eclipsing all annual revenue and earnings records. With a tremendous product and technology pipeline for 2012, we're excited about the global growth opportunities presented by Ultrabook systems, the data center, security, and the introduction of Intel-powered smartphones and tablets.'

Otellini's comments offer a clear indication of where his company is looking to grow, and later explanations helped to cement these areas in investors' minds: slim and light Ultrabooks will likely grow to around 40 per cent of the consumer laptop market by the end of 2012, Otellini claimed, stating that 'I have not seen this level of excitement in our customer base since before Centrino.'

For smartphones and tablets, which are to be powered by Intel's newly-launched Atom Z2460 system-on-chip platform, Otellini is betting the farm on Google: 'The thing is,' he explained during the call, 'tablets are a little bit about hardware and an awful lot about software - and I think that, until you get to Ice Cream Sandwich, the offering isn't as powerful as what's out there with Apple.

'As Ice Cream Sandwich tablets start shipping, I think you'll start seeing a little bit better receptivity. You know, Google just added the Music Store, the videos are better, everything got a little bit better with ICS,
' Otellini explained, 'and so I think the better test is year two here, in terms of is there anybody who can compete with the iPad. The other part of that test, of course, is the Windows 8 tablets that are being queued up for production.'

In this area, however, Intel is likely to hit stiff competition: rival chip design giant ARM is already boasting design wins across the overwhelming majority of smartphones and tablets, and with Microsoft adding support for the ARM instruction set architecture to Windows 8 Intel is going to have a fight on its hands to convince OEMs and ODMs to opt for the x86-based Atom in place of the old familiar ARM chips.

Boasting a 'tremendous product and technology pipeline' for the future, Otellini announced that Intel will be spending $10.1 billion on research and development projects in 2012 but declined to explain precisely where that money will go; given his earlier comments, however, we're willing to bet a three-way split between the PC Client Group, the Data Centre Group, and the 'Other Intel Architecture Group' responsible for products that don't fit either of the aforementioned categories.

Looking at the figures for the year, it's easy to see where Intel is making its bumper profits: to the year ending December 31st 2011, the PC Client Group - responsible for the desktop and laptop chips we know and love - made an operating income of $14.8 billion, while the Data Centre Group - the outfit behind the Xeon and Itanium chips, networking hardware and projects like the Many Integrated Cores (MIC) accelerator boards - made $5.1 billion.

The news wasn't so good in other areas, with the Software and Services Group representing a loss of $32 million while the 'Other Intel Architecture Group' dropped the ball with a $577 million loss; a serious slip from last year's $270 million net income.

With the worst of the hard drive shortages - caused by flooding in Thailand, which forced several manufacturers to shut down production facilities - now over, Otellini seems confident that Intel will be breaking financial records again next year; and if the new Atom family performs as well as early indications show, he could be on to something.

Are you disappointed that Otellini's earnings call didn't spend any time focusing on Ivy Bridge and other desktop-oriented products, or just pleased to see the company investing plenty of cash in its research and development arm? Share your thoughts over in the forums.

6 Comments

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r3loaded 20th January 2012, 11:27 Quote
It's amazing to see that while the armchair pundits and analysts on the internet are predicting Intel's demise at the hands of ARM and the death of the Wintel monopoly, Intel is absolutely raking in the profits. The fact that they've moved so quickly to get Atom into tablets shows they're certainly not complacent in countering threats.
azrael- 20th January 2012, 11:46 Quote
Aren't Ultrabooks pretty much synonymous with Ivy Bridge right now? I know the SB powered ASUS Zenbook line is out, but still.

Also, is it me or is Paul O. trying to do a "Steve Jobs" in that photo...?
Parge 20th January 2012, 12:08 Quote
10.1 Billion on research is just an amazing amount of money. I hope some of it goes into their on Chip GPUs. AMD have the right idea, but can't provide the CPU performance to back it up making Llano a hard sell. It'd be great to see mainstream desktops and laptops being able to play games.
kzinti1 20th January 2012, 19:29 Quote
It's very good that Intel will have such a large amount to spend on R&D.
It's also too bad that the called the i7-3xxx-K-E cpu's "Enthusiast" cpu's when they're actually "Enterprise" cpu's. They don't deserve any profit from that flat-out lie.
I couldn't help but notice that the hard-drive shortage due to the Thai Flood Disaster is over.
I suggest that nobody buy any hard-drives until the prices return to their pre-flood levels.
If you keep buying them at today's cost, there will be no incentive at all to lower the prices to where they once were.
It isn't exactly as if the World economy has increased so much to absorb this, now, artificial inflation.
It would be extremely nice if Intel were to throw a few dozen billions to the next couple of generations of SSD's. They have the know-how but need to develop the engineering and manufacturing side of the equation.
I'm also looking forward to the day when every single cpu operates exactly the same, from batch to batch. These days, it's quite difficult, and expensive, trying to find a good cpu that can overclock as well as the ones from prior and later batches.
I have a pair of i7-2600K's. One overclocks like a dream. The other just heats up and quits when pushed a little. They cost the same, they are marked the same, they are as different as night and day. There's no reason for this to ever occur.
Intel is also at the brink of producing a gaming motherboard equal to the best of the rest. They can make the best gaming/overclocking motherboard in existance. They have the tools. They have the facilities. They have the personnel and wherewithall. They only need to bear down and make it.
Most people buy Intel cpu's. Why not make motherboards that are also overwhelmingly the best?
Xir 21st January 2012, 10:51 Quote
Intel has been "raking in Money" for decades...
Strangely it doesn't show on their stock.

It's doing quite well right now though, I just need Ivy-Bridge releasedate as a sell-point.
r3loaded 21st January 2012, 17:18 Quote
Quote:
Originally Posted by Xir
Intel has been "raking in Money" for decades...
Strangely it doesn't show on their stock.
Stock prices have never properly corresponded with a company's profitability or prospects. It's all about hype and expectations, especially when looking at short-term trends.
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