News Intel beats EPS but misses on revenue in 4Q17

[Hitman928]

Will update post with more. Earnings call soon.

+Intel has guided downward on FY19 revenue. Guidance for $71.5B vs $73.1B expected. Data center expected up mid single digit and client side expected down low single digit.

+Desktop unit volume dropped 7% Q/Q and 8% Y/Y while ASPs rose 5% and 13%, respectively. Notebook units dropped 10% on the quarter and grew 1% on the year with ASPs up 3% and 6%. Data center units fell 3% Q/Q and grew 9% Y/Y with ASPs up 2% and 1%.

+Q4 revenue breakdown: Client Computing, $9.82B (consensus: $10.01B); Data Center, $6.1B (consensus: $6.35B); IoT, $816M (consensus: $812.7M); Non-Volatile Memory Solutions, $1.11B (consensus: $1.12B); Programmable Solutions, $612M (consensus: $518.7M); Other, $231M (consensus: $297.5M).

https://seekingalpha.com/news/3425818-intel-minus-7-percent-downside-fy-revenue-guide

On the plus side for investors, they increased their dividend by 5%.

 

[jpiniero]

The guidance doesn't seem that bad given what I was expecting, re: Rome.

 

[Mopetar]

The guidance doesn't seem that bad given what I was expecting, re: Rome.

Is Rome even launching in the next quarter? AMD haven't given an exact date, but it might not be until mid-year.

 

[Dayman1225]

Is Rome even launching in the next quarter? AMD haven't given an exact date, but it might not be until mid-year.

They said “mid year”

 

[Hitman928]

The guidance doesn't seem that bad given what I was expecting, re: Rome.

The datacenter market continues to grow so there is room for both AMD and Intel to grow there at the same time. I do expect AMD to continue to grab a higher percentage of the market as time goes on though. AMD's guidance will be telling in this regard.

Is Rome even launching in the next quarter? AMD haven't given an exact date, but it might not be until mid-year.

As Dayman said, AMD has publicly stated mid year but they also mentioned they were sampling to customers I believe at the tail end of last year, so mid-year 19 should be right on schedule.

 

[jpiniero]

Is Rome even launching in the next quarter? AMD haven't given an exact date, but it might not be until mid-year.

Was talking about the yearly guidance.

 

[Nothingness]

Only 9% increase YoY for this quarter and 13% for the full year. Intel are doomed.

 

[Arachnotronic]

The guidance doesn't seem that bad given what I was expecting, re: Rome.

And what were you expecting, exactly?

 

[jpiniero]

And what were you expecting, exactly?

A bigger drop, like 10 or 20%. Intel's going to have to cut prices pretty significantly in the Data Center; and they will have to use two dies with Cooper Lake instead of one.

Maybe the Epyc 2 ramp is much slower than I had thought, and the pain will be more in 2020.

 

[Arachnotronic]

A bigger drop, like 10 or 20%. Intel's going to have to cut prices pretty significantly in the Data Center; and they will have to use two dies with Cooper Lake instead of one.

Maybe the Epyc 2 ramp is much slower than I had thought, and the pain will be more in 2020.

So after Bob Swan said on the Q3'18 earnings call that they expected another record year in 2019, you expected them to guide to a 10-20% revenue decline in 2019?

 

[Markfw]

I think that the pain from Rome will hurt Intel 2019 H2, and 2020. Not to mention Ryzen 3xxx, but from a corp position, I think Rome and server is what will hurt them the most. Data centers live off of efficiency, and Rome delivers that, regardless of performance (even though I think performance and core count are also in AMD's court)

 

[jpiniero]

So after Bob Swan said on the Q3'18 earnings call that they expected another record year in 2019, you expected them to guide to a 10-20% revenue decline in 2019?

Yup. At some point they will have to come clean on 10 nm and how much server share they will lose because of it's failure. But if the pain won't be seen until 2020 they can wait. I think that's a big reason there hasn't been a new CEO announced yet; they might actually be having difficulty recruiting one without sharing the bad news before they officially take over.

 

[Ajay]

Yup. At some point they will have to come clean on 10 nm and how much server share they will lose because of it's failure. But if the pain won't be seen until 2020 they can wait. I think that's a big reason there hasn't been a new CEO announced yet; they might actually be having difficulty recruiting one without sharing the bad news before they officially take over.

I’m sure Intel is sharing their real roadmap, under NDA, with prospective CEOs and that’s why no-one has taken the job yet. I agree that the real pain is going to be felt in 2020; enterprise will transition slower but cloud providers could be the proverbial snowball rolling down hill. TCO, as mark mentions, is going to be too heavily in AMD's favor.

 

[dmens]

Intel's real road map is an absolute disaster. Not that it really matters, data center revenue will die the death of a thousand cuts since all the big cloud providers are rolling their own infrastructure: CPU's, boards, everything. Competition from AMD is is limited by capacity anyways.

AMD will help Intel commit suicide but AMD is not pulling the trigger. Intel is fully capable of digging its own grave.

 

[Phynaz]

Intel's real road map is an absolute disaster. Not that it really matters, data center revenue will die the death of a thousand cuts since all the big cloud providers are rolling their own infrastructure: CPU's, boards, everything. Competition from AMD is is limited by capacity anyways.

AMD will help Intel commit suicide but AMD is not pulling the trigger. Intel is fully capable of digging its own grave.

Holy crap, where have you been?!?

 

[AtenRa]

Intel will continue to have a strong 2019 datacenter revenue even after AMDs EPYC 2 will launch.
Even after EPYC 2 launch, Im not expecting AMD to manage to grab more than 10-12% of total server market in 2019.

 

[dmens]

Holy crap, where have you been?!?

A better place now. Intel faces a very grim future, every aspect of its business is under attack and its rotten culture is incapable of responding.

This is the existential threat to Intel's data center revenue: https://www.theregister.co.uk/2018/11/27/amazon_aws_graviton_specs/

That and everyone else and their dog are also making their own CPU's.

 

[frozentundra123456]

Holy crap, where have you been?!?

Low post count Intel hater; they just keep popping out of the woodwork.

 

[dmens]

Low post count Intel hater; they just keep popping out of the woodwork.

Well, "Low post count Intel hater" is technically correct. But I have the credentials to emit that hate because of the many, many years spent inside the belly of the beast working on relevant products.

 

[Ajay]

Intel faces a very grim future, every aspect of its business is under attack and its rotten culture is incapable of responding.

Is it really that bad inside Intel? Seems a bit harsh, though their recent track record (like totally blowing it on the phone SoC market) certainly begs the question.

 

[dmens]

Is it really that bad inside Intel? Seems a bit harsh, though their recent track record (like totally blowing it on the phone SoC market) certainly begs the question.

It is an absolute s***show. The mass exodus of talent speaks for itself.

The zombie Andy Grove would eat the brains of the entire corporate suite if he saw how his managerial and technical principles have been perverted.

 

[Ajay]

Well, there just aren’t many CEOs as talented and as well plugged into their corporate culture as Andy Grove. That said, I wonder if Intel grew to large too fast. They definitely need top notch leader going forward, but the most promising prospects are saying 'no thanks'.

 

[dmens]

I don't think size is the issue. Headcount has been roughly level for the last 10 years.

The processes at Intel are institutionally corrupt. Everything from how technical work is done to how people are treated. The things you do at Intel to further a career are considered liabilities elsewhere, this is not an exaggeration.

Even a new outsider CEO faces the insurmountable challenge of an entrenched lifer clique that is intent on milking the cow all the way to the end.

Intel will be nothing more than a distasteful backup to TSMC capacity before I retire. Bank on it.

 

[Phynaz]

Low post count Intel hater; they just keep popping out of the woodwork.

Nah man, he worked on Phi. He and Ctho95 - who was with AMD at the time - would have some very good technological discussions.

That was a different time...it was a time where you wouldn’t get a downvote from a moderator for asking where someone who hasn’t posted in a long time has been.

 

[DrMrLordX]

That and everyone else and their dog are also making their own CPU's.

Interesting, but maybe not relevant unless Amazon is doing this for the same reason that the Russian government more-or-less bought out Elbrus. I don't see how Amazon can internally justify an A72-based ARM server CPU in 2019 (or beyond) when price/performance and performance/watt will be so much better on products from other companies. Hell if they want to go ARM, they would be better off getting in bed with Marvell/Cavium than trying to roll their own (Huawei is not really an option despite having a technically excellent 64c ARM server CPU). Unless the cloud space is at a "good enough" turning point that companies like Amazon just don't care anymore about improving TCO.

If Intel goes down, I expect a fight between AMD, Marvell, Huawei, and possibly OpenPOWER cloners. And uh maybe Samsung?