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Intel Back to Focusing on Mobile

Posted on Wednesday, Feb 19th 2014

According to Gartner’s latest report on the worldwide PC industry, global PC shipments during the last quarter fell 7% over the year to 82.6 million units. This was the seventh consecutive quarter where PC shipments registered a decline. This spells bad news for chipmaker Intel (Nasdaq: INTC), which is still struggling to establish its dominance in the mobile dominated market.

Intel’s Financials
Intel’s fourth quarter revenues grew 3% over the year to $13.8 billion, ahead of the market’s expectations of $13.2 billion. EPS of $0.51 was marginally short of the Street’s projections of $0.52.

By segment, PC sales were flat over the year at $8.6 billion. They saw growth within the Data Center Group where sales grew 8% to $3.0 billion. Other Intel architecture reported a 9% growth in revenues to $1.1 billion.

They ended the year with revenue of $52.7 billion, down 1% from $53.34 billion in 2012. EPS fell significantly from $2.13 in 2012 to $1.89.

For the current quarter, Intel projected revenue of $12.3 billion-$13.3 billion, compared with the Street’s projections of $12.79 billion. They expect to end the year with revenues to be flat at $52.7 billion. The market was looking for a revenue growth of 1% over the year.

Intel’s Cherry Trail
Last year, Intel was making strong moves to attack the mobile device industry. The market was waiting for their latest tablet platform Bay Trail to be launched during the holiday season last year to cater to Windows 8.1 and Android. While Intel did release the Windows version, the Android one is still missing.

For now, Intel is counting on the development of their first 14-nanometer Atom, the Cherry Trail, which is expected to give it a significant edge over existing similar processors. The market is looking toward Cherry Trail to be able to quadruple graphics performance while enhancing CPU productivity. With Cherry Trail, Intel will deliver a more robust 3-D API support and move to a new graphics architecture, equipped with four times the graphics cores. The chip will also improve video capabilities by enabling the video-encoding engine to encode 1080p video at 60 frames per second, compared with Bay Trail’s capability of 30 frames per second.

Besides being big on graphics, another advantage on Cherry Trail’s side will be the availability of an Android version at the time of launch. Cherry Trail is expected to give Intel the push it needs to advance in the high graphics driven mobile device market. Intel is expected to position Bay Trail for the low priced tablets and Cherry Trail will focus on the higher end devices.

But it may be too early to cheer for Intel. Recent rumors suggest that Intel may already be facing delays in development of the chip. Intel has not responded to the rumors, but if they were true, they could be a big setback to them.

Intel Sells TV Business

Meanwhile, after experimenting with their internet TV service OnCue, Intel recently decided to sell it off to Verizon. Till last year, the TV offering was being tested and was expected to be introduced in select U.S. markets later last year. It appears that Intel was struggling with signing content deals to manage the service and thus decided to sell the entire media division. Terms of the deal were not disclosed. The sale will help Intel push more of its focus back on its core processor business.

Their stock is trading at $24.76 with market capitalization of $123.08 billion. It touched a high of $27.12 earlier this year.


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