Intel vows mobile push following revenue slip
July 18, 2013 // 10:12 a.m.
Intel has backtracked on claims that it would easily weather the global slump in PC sales, admitting in its most recent financial forecast that projected growth has turned into a small but noticeable shrinkage in revenue.
In an earnings call with press, investors and analysts, Intel was forced to admit that its previously-projected growth has not come to pass. Instead, its quarterly revenue stood at $12.8 billion - down five per cent year-on-year - thanks to the continuing slowdown in the market for traditional desktop and laptop PCs. That revenue - around $100 million away from analysts' average predictions for the company - has resulted in a profit of $2 billion, and while that's nothing to be sniffed at it's still down 29 per cent year-on-year.
During the call, new Intel chief executive Brian Krzanich explained how his company is looking to other areas - for which you should read 'mobile' - for future growth in what some are hyperbolically calling the post-PC era. 'In my first two months as CEO, I have listened to a wide variety of views about Intel and our industry from customers, employees and my leadership team and I am more confident than ever about our opportunity as a company,' he claimed.
'Looking ahead, the market will continue buying a wide range of computing products. Intel Atom and Core processors and increased SoC integration will be Intel's future. We will leave no computing opportunity untapped. To embrace these opportunities, I've made it Intel's highest priority to create the best products for the fast growing ultra-mobile market segment.'
Intel's desire to break into mobile, where its small Cambridge-based rival ARM rules the roost, is placed in stark clarity when divisional earnings are broken down. In the second financial quarter of the year, Intel's PC Client Group - responsible for the chips that go into desktops, laptops and all-in-ones - saw revenue drop 7.5 per cent to $8.1 billion. The Data Centre Group, meanwhile, saw revenue from the server market sit flat year-on-year at $2.7 billion. Finally, the 'Other Intel Architecture Group' - into which mobile currently sits - dropped a whopping 15 per cent year-on-year to $942 million.
Those are figures Intel is hoping to grow: its projections for the next quarter show a revenue of $13.5 billion at a gross margin of 61 per cent - three points higher than its actual Q2 performance. For the year, the company is hoping to finish on a level standing with last year - a distinct contrast to the company's previous projection of low single-digit growth.
With little sign that the PC market will grow in the near future, and Intel's attempts at breaking into mobile having fallen somewhat flat thus far, it's clear that Krzanich is going to have his work cut out if he wants Intel to grow under his auspice as it did under those of his predecessor Paul Otellini.