Intel Q4 results. 13.8B$ revenue. 52.7B$ year.

[ShintaiDK]

Quite interesting revenue wise. PC group flat, servers up 8% YoY. So it seems we are close to the bottom now. PC group was up 2% over Q3.

http://www.intc.com/releasedetail.cfm?ReleaseID=819810

PC Client Group revenue of $8.6 billion, up 2 percent sequentially and flat year-over-year.
Data Center Group revenue of $3.0 billion, up 3 percent sequentially and up 8 percent year-over-year.
Other Intel architecture operating segments revenue of $1.1 billion, up 4 percent sequentially and up 9 percent year-over-year.
Gross margin of 62.0 percent, 1 percentage point above the midpoint of the company's prior expectation of 61 percent.
R&D plus MG&A spending of $4.8 billion, slightly above the company's prior expectation of approximately $4.7 billion.
Tax rate of 26 percent versus the company's prior expectation of 25 percent.

 

[AtenRa]

Look at that,

Notebook volume(4%) decreased more than Desktop Volume(2%) Year over Year.
Also,
Notebook Average Selling Price (ASP) decreased 2% when Desktop ASP INCREASED by 6%. Thats amazing, and people saying desktop is dieing :whiste:

Edit: I guess Intel is also focusing on the shrinking Desktop like someone was saying about the competition

Also, Tablet, Phones and Netbook had a loss of 620Millions in Q4 2013. That doesnt look good, ATOM based mobile division have lost 3.8 Billions in 2012 and 2013. And they are going to spend another Billion in 2014 plus the losses it will skyrocket to more than 5 Billions in just three years.

 

[USER8000]

According to the BBC,YoY profits have dropped 13% it seems:

http://www.bbc.co.uk/news/technology-25771760

 

[AtenRa]

According to the BBC,YoY profits have dropped 13% it seems:

http://www.bbc.co.uk/news/technology-25771760

Yeap, annual Net Income has dropped 12.7% from 11billions to 9.6Billions

 

[littlebluesmurf]

Also, Tablet, Phones and Netbook had a loss of 620Millions in Q4 2013. That doesnt look good, ATOM based mobile division have lost 3.8 Billions in 2012 and 2013. And they are going to spend another Billion in 2014 plus the losses it will skyrocket to more than 5 Billions in just three years.

The losses are up again as well. From 495 million in Q4 2012 to 620 million in Q4 2013 and 577 million for 2011 to 1.37 billion for 2012 to 2.44 billion in 2013.

 

[meloz]

Also, Tablet, Phones and Netbook had a loss of 620Millions in Q4 2013. That doesnt look good, ATOM based mobile division have lost 3.8 Billions in 2012 and 2013. And they are going to spend another Billion in 2014 plus the losses it will skyrocket to more than 5 Billions in just three years.

I predict even bigger losses for this division. Intel's internal culture cannot tolerate low margin products. They would much rather take losses than accept low profit margins, at least till they have the high margin server segment locked to bail them out of any folly.

All the lead in fabrication technologies and performance/watt is utterly useless if you cannot bid low enough to win big ODM orders. The mobile+tablet segment is a high-volume, low-margin one, and with time becoming even more so.

Right now there is still a small but noticable performance difference between top-tier ARM products and the value stuff Mediatek produces. In 12-18 months time today's top-tier will percolate down to Mediatek prices, and finding consumers for expensive cutting-edge mobile chips will be near impossible with Qualcomm, Intel and even nvidia bidding for the same consumer.

 

[mrmt]

The losses are up again as well. From 495 million in Q4 2012 to 620 million in Q4 2013 and 577 million for 2011 to 1.37 billion for 2012 to 2.44 billion in 2013.

In any manufacturing business you cannot switch a division from being low volume to being high volume without incurring in a period of heavy operating losses.

What you are seeing now is exactly this period. But if Intel cannot get meaningful orders until Q214, then yes, they will be in trouble. But let's cross this river when we get there.

 

[mrmt]

I predict even bigger losses for this division. Intel's internal culture cannot tolerate low margin products. They would much rather take losses than accept low profit margins, at least till they have the high margin server segment locked to bail them out of any folly.

Gross margins doesn't have a direct correlation to operating margins. You can have a very low margin product but with very low SG&A and still make a healthy profit on it, and you can have a very high margin product that will put your balance in the red.

The kind of high gross margins you see at Intel's balance isn't "culture", but a business decision guided by their business model:

You have a bleeding edge team, using bleeding edge tools and manufacturing a design in a bleeding edge factory, which has a node deployed which was more expensive than your competitor's. If you don't get high gross margins *and* hit your targeted volumes your IRR for the project slumps.

 

[witeken]

Also, Tablet, Phones and Netbook had a loss of 620Millions in Q4 2013. That doesnt look good, ATOM based mobile division have lost 3.8 Billions in 2012 and 2013. And they are going to spend another Billion in 2014 plus the losses it will skyrocket to more than 5 Billions in just three years.

Return on invest will be much higher than 5 billion.

 

[SiliconWars]

And bleeding billions on ultramobile, like I said would happen.

 

[SiliconWars]

Return on invest will be much higher than 5 billion.

When? Next year is going to be horrible with the $1 billion giveaway on top. These losses are at such a stage they will never be returned, it's no longer about money here and more about trying to damage the competition.

 

[ams23]

And bleeding billions on ultramobile, like I said would happen.

People like you lack foresight into the future of computing.

Investing in ultra mobile computing was absolutely the right thing for Intel to do. Any tech company that did not invest in this area will fall behind when it comes time to shaping the future of computing.

 

[SiliconWars]

People like you lack foresight into the future of computing.

Investing in ultra mobile computing was absolutely the right thing for Intel to do. Any tech company that did not invest in this area will fall behind when it comes time to shaping the future of computing.

Lol, the lack of foresight was with Otellini. Ultra-mobile has been here for years - sans Intel - that's why they are in so much trouble now.

Flat 2014 so $9.6 billion in income if they are lucky. Spending $11 billion in CAPEX and another $1 billion on the Fail Trail giveaway. EVERYTHING I said would happen to Intel is coming to fruition now. How long before the money runs out at this rate hm? 5-6 years?

 

[lefty2]

Look at that,

Also, Tablet, Phones and Netbook had a loss of 620Millions in Q4 2013. That doesnt look good, ATOM based mobile division have lost 3.8 Billions in 2012 and 2013. And they are going to spend another Billion in 2014 plus the losses it will skyrocket to more than 5 Billions in just three years.

What about intelligent systems (aka embedded) ? That's also in the same group. I wonder how much they contribute to the loss?

 

[jpiniero]

People like you lack foresight into the future of computing.

Investing in ultra mobile computing was absolutely the right thing for Intel to do. Any tech company that did not invest in this area will fall behind when it comes time to shaping the future of computing.

But if Intel can't change their business model to allow for selling mostly $20-30 chips it won't matter.

 

[frozentundra123456]

People like you lack foresight into the future of computing.

Investing in ultra mobile computing was absolutely the right thing for Intel to do. Any tech company that did not invest in this area will fall behind when it comes time to shaping the future of computing.

Unfortunately, Intel was late to the party, and ARM has a very strong foothold. Personally, I will never buy another android tablet, as I absolutely *hate* the OS. I mean, words cannot explain how much I hate android on anything but a phone, where I can live with it.

I am older, and have always operated in a windows environment. Unfortunately for Intel, many people have become accustomed to android, and arent as frustated by its limited features as I am. They also love their "apps", although I prefer windows where you dont need an "app" to do the most trivial of tasks.

So I really hope intel (or AMD) succeeds in making x86 viable. It is a very difficult road though, and Intel will not be able to match the kind of profits they are accustomed to.

 

[jpiniero]

Kinda interesting that BK specifically mentioned Enthusiast i5 and i7 sales as a positive. Guess they are selling plenty of Haswell-K, at least compared to the previous year's models.

 

[mrmt]

Flat 2014 so $9.6 billion in income if they are lucky. Spending $11 billion in CAPEX and another $1 billion on the Fail Trail giveaway. EVERYTHING I said would happen to Intel is coming to fruition now. How long before the money runs out at this rate hm? 5-6 years?

Yes, everything you mentioned is happening. Let me remind you of your Q313 "forecast":

There is actually another (correct) reason that will become very apparent on Thursday. AMD will outperform Intel in PC's. No hints other than that, sorry.

And, oh boy, CAPEX and net income in the same sentence, that does not bode well for you.

 

[SiliconWars]

Yes, everything you mentioned is happening. Let me remind you of your Q313 "forecast":

Pretty sure AMD's Q3 was up more compared to Intels YoY, wasn't it?

And, oh boy, CAPEX and net income in the same sentence, that does not bode well for you.

That's not the same sentence. You can normally tell by the period in-between.

 

[Qwertilot]

The ultra mobile section surely doesn't have to make that investment back by itself for it all to have made sense.

If it gives them lots of volume, even low margin, which then lets them keep producing the high margin server/enthusiast chips etc then it'll pay for itself very quickly given the sort of return they're getting on those lines.

 

[witeken]

When?

Intel will reduce BoM of Bay Trail tremendously in 2014, it should be 50% lower at the end of the year, according to BK. And when they're at Broxton and 14nm SoFIA, it should be at the levels where they want it to be.

At that point and when they also have a nice amount of market share, they will be farming billions of dollars every year, just like they're doing in the desktop market.

Next year is going to be horrible with the $1 billion giveaway on top. These losses are at such a stage they will never be returned, it's no longer about money here and more about trying to damage the competition.

Horrible? Intel aims at ~30% market share in 2014.

 

[SiliconWars]

I think you're overestimating how much ultra-mobile is worth in silicon terms witeken. Intel's $1 billion giveaway should get them ~20% market share, but at the cost of more $billions lost. There just isn't money in tablets unless you are Apple, and Intel is so far behind Qualcomm in phones it's basically a forgone conclusion.

It will be many years before the Other Intel Architecture group posts a profit, if it ever does again.

 

[AtenRa]

What about intelligent systems (aka embedded) ? That's also in the same group. I wonder how much they contribute to the loss?

Embedded command a large margin over the same products sold as consumer oriented. Not only that, the processors are identical to the consumer(ATOMs, Core i family etc) with only the motherboards being different designs. I dont believe the Embedded motherboards having a loss, Intel has a strong Embedded market share.

 

[AtenRa]

Intel will reduce BoM of Bay Trail tremendously in 2014, it should be 50% lower at the end of the year, according to BK. And when they're at Broxton and 14nm SoFIA, it should be at the levels where they want it to be.

That is why Intel will spend ONE BILLION to help OEMs use their highly expensive ATOM platform in 2014. So, if Intel will have a loss again in the Tablet/Phone sector in 2014 it will be even higher than 2013 because of that 1 Billion.
It is no exaggeration to expect Intel to loose more than 2Billions in 2014 in that sector raising the overall amount to a stunning 6+ Billion over the period of three years.

At that point and when they also have a nice amount of market share, they will be farming billions of dollars every year, just like they're doing in the desktop market.

Dont forget the competition knows what Intel is planing to do, they are not going to stay still until Intel reach the end of 2014. Early 2015 the first 16nm/14XM ARM products will hit the market. So dont expect Intel to have an easy road after all. It will take enormous market share to get profitable in the Tablet/Phone market for Intel and that is not going to be in the next 2-3 years.

 

[witeken]

I predict even bigger losses for this division. Intel's internal culture cannot tolerate low margin products. They would much rather take losses than accept low profit margins, at least till they have the high margin server segment locked to bail them out of any folly.

All the lead in fabrication technologies and performance/watt is utterly useless if you cannot bid low enough to win big ODM orders. The mobile+tablet segment is a high-volume, low-margin one, and with time becoming even more so.

That isn't correct. Intel, or any company, simply will not price itself out of the market when they've just got a small fraction of the (tablet/smartphone) market. At this point they're simply convincing (as in: paying for the additional BoM costs they still have at this point with Bay Trail) their partners that they're serious about mobile and have a compelling roadmap etc.

So they are able to bid low enough. The good thing for Intel is that once they have more market share, other companies that are able to survive with lower margins but higher volume, can't sustain very low margins because volume will be too low. Also, at the same price, an Intel SoC built on a superior node will give Intel much higher margins.

Right now there is still a small but noticable performance difference between top-tier ARM products and the value stuff Mediatek produces. In 12-18 months time today's top-tier will percolate down to Mediatek prices, and finding consumers for expensive cutting-edge mobile chips will be near impossible with Qualcomm, Intel and even nvidia bidding for the same consumer.

I think you highly overestimate Mediatek's ability to have low(er) prices. They also must pay ARM and TSMC etc. and be profitable with ~40% margins. You could, however, replace Mediatek with Intel, since they do everything themselves, on a superior process node, which would mean lower prices at the same margins.

I also don't think they will have today's top-tier products within 18 months, but rather some A53 many-core.

You should read this article: SeekingAlpha - Intel Does The Unthinkable