Mobile weak spot in Intel’s impressive Q2 results

Mobile weak spot in Intel’s impressive Q2 results

16 JUL 2014

Silicon giant Intel announced profit and revenue growth for the second quarter of 2014, although its Mobile and Communications group stood out as the weak performer.

On a group level, net income increased 40 per cent year-on-year to $2.8 billion, on revenue which increased 8 per cent to $13.8 billion. Operating income increased 41 per cent to $3.8 billion.

Its only unit that was negative on an operating level was Mobile and Communications, which saw a loss of $1.22 billion, compared with a loss of $761 million in the prior year, on revenue of $51 million, down from $292 million.

In Intel’s conference call, Stacy Smith, CFO of the company, said that the company is seeing a decline in its feature phone and 2G/3G modems business, as the industry transitions towards integrated LTE products.

Brian Krzanich, CEO of Intel, said that the company is “squarely on track to our 40-million-unit tablet goal, shipping 10 million units in the second quarter”. This compares with five million in the first quarter, with “clearly Q4 being probably the bigger of the two quarters remaining”.

According to figures from Strategy Analytics, Intel has an 11 per cent share of the tablet application processor market by revenue, behind Apple and Qualcomm.

Intel is working towards qualification of its 7260 category 6 LTE product with carrier aggregation this quarter. Smith said that this is “a little bit later than we thought”, meaning its ramp-up has been delayed “more towards the end of this year or early next year”.

And SoFIA, its integrated baseband and apps processor for smartphones and tablets, “remains on track for Q4 of this year”.

During the conference call, Intel made several references to the strategic alliance it formed with Chinese semiconductor company Rockchip, intended to target entry-level Android tablets worldwide.

This partnership extends the SoFIA family to three products: dualcore 3G, quadcore 3G, and LTE.

Intel is also doing a solid job of building its position in the Internet of Things (IoT) market, with operating profit from this group of $155 million, up from $123 million, on revenue of $539 million, up from $434 million.

But it was the strong performance of Intel’s core PC Client and Data Centre groups that really drove growth.

Operating profit in PC Client was $3.73 billion, up from $2.65 billion, on revenue of $8.67 billion, up from $8.16 billion.

Operating profit in Data Centre was $1.82 billion, up from $1.3 billion, on revenue of $3.51 billion, up from $2.94 billion.

“The improving economic environment, PC refresh, form factor innovation and the end-of-life of Windows XP combined to drive better than expected demand. In fact microprocessor volume in the second quarter was an all-time record,” Krzanich said.

Analyst Jack Gold described the period as “a very good quarter for Intel,” despite the poor performance in mobile (which was not unexpected). “They are reinventing themselves to the needs of the new market realities, and will remain a major force in defining the next generations of mobile and IoT markets,” he claimed.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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