Intel's profits have dropped 25 per cent year-on-year as a result of the PC market slump, but the company's investors are convinced it can weather the storm.
Intel has become the latest company hit by the global slow-down
in the PC market, announcing a whopping 25 per cent dip in profits for its latest quarter.
That's not to say the chip giant is hurting, of course: despite slow sales that are causing heartache for most PC makers, the company reported net income of $2.05 billion for the most recent quarter - equivalent to earnings of 40 cents per share. Those are the sorts of numbers for which its rivals would kill, but for Intel it represents a serious dip: the same period last year saw the company rake in $2.74 billion, or 53 cents per share.
The PC slump has brought with it some tightened margins at the semiconductor specialist, it seems: revenue for the quarter was down $12.58 billion from $12.91 billion for the same period last year, revealing that Intel's 25 per cent dip comes as a result of lower profit margins rather than a serious reduction in orders.
For chief executive Paul Otellini, the figures are a relative high on which to exit. 'Amidst market softness, Intel performed well in the first quarter and I'm excited about what lies ahead for the company,
' Otellini, who is to retire from the company
during the next financial quarter, told press, investors and analysts during the company's latest earnings call. 'We shipped our next generation PC microprocessors, introduced a new family of products for micro-servers and will ship our new tablet and smartphone microprocessors this quarter; we are working with our customers to introduce innovative new products across multiple operating systems; [and] the transition to 14nm technology this year will significantly increase the value provided by Intel architecture and process technology for our customers and in the marketplace.
For whomsoever is to fill Otellini's shoes at Intel, the figures reveal much about what needs to change at the company: while server revenue was up 7.5 per cent year-on-year, its desktop and laptop division saw revenue drop six per cent in the same period. The company's renewed focus on the mobile market, which has seen it develop low-power system-on-chip products based on its Atom architecture for the first time in order to better compete with Cambridge-based rival ARM, will likely be the company's ticket to continued growth at a time when the consumer market appears to be spending cash on tablets and smartphones
rather than desktops and laptops - a progression the company has Otellini to thank for spearheading. 'We can now compete wherever there is computing,
' he added.
The next quarter will be a proving ground for Intel: with its CEO leaving to enjoy retirement and its latest Haswell architecture chips to launch, the company is hoping to boost revenue significantly - but if the launch of Haswell, combined with Intel's promises that low-power touch-screen Windows 8 laptops will hit a sub-$200 price bracket thanks to new Atom processors, doesn't inject some movement into the stagnant PC market, it could easily fall short of its projected $12.9 billion revenue target.
Investors, however, don't seem to be too concerned: in a united show of faith in the company's future, trading has seen the company's stock price rise 2.5 per cent to $21.92 since the financial figures were released, but still remaining down on their $29 high this time last year. For comparison, AMD's stock is up 1.67 per cent in the same trading period - thanks largely to rumours that the company has won presence in all three upcoming next-generation games consoles - while ARM Holdings is down 1.01 per cent.