Intel Corp ended last year on a high note, and appears confident that its momentum can continue. However, the question is how much the company has to change to keep up the pace.
Revenue for all of last year was US$55.8 billion. However, US$49 billion of that was in PC and server chips, according to the world’s largest maker of semiconductors. Mobile devices, considered an important growth area, had revenue of US$200 million and losses of US$4.2 billion, Intel said.
The transition to new devices matters, because for decades Intel’s model for success has been to make enough money to invest before rivals in advanced chipmaking facilities, with transistors of almost unimaginably small size. If growth and profitably slip, Intel has big problems.
Intel’s chief financial officer Stacy Smith put a positive spin on the loss in mobile and said in an interview that some success with tablets had “eliminated all doubt that it’s a great product line.”
Intel has a solid financial footing to pursue its goal. It ended the year with US$14.1 billion in cash, despite paying US$4 billion in dividends and buying back more than US$10 billion in stock.
Profit margins increased over the year and the quarter, ending up at 65.4 percent. Intel reported that net income in the fourth quarter rose 39 percent to US$3.7 billion, or US$0.74 per share, from the previous year. Revenue was US$14.7 billion, up 6 percent. Intel projected revenue this year would grow “in the mid-single digits,” an improvement over some recent years.
The earnings exceeded expectations, particularly given the lackluster sales of PCs recently. Intel’s PC business grew 3 percent in the fourth quarter, compared with a year ago. The server business grew 25 percent, reflecting in part the growing influence of large cloud-computing systems in business and personal computing.
Still, Intel shares were off about 1.1 percent in after-hours trading on Thursday, mostly on concerns that the company’s sales outlook was a bit below some expectations.
“They continue to outship the rest of the industry in PCs,” Edward Jones analyst Bill Kreher said. “You can’t do that forever.”
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