Intel's Q1 solid, but mobile losses weigh

Intel's Q1 solid, but mobile losses weigh

Summary: Intel's mobile chip business is a money pit, but the Internet of things unit looks solid. The data center division carries the profit team though.


Intel's first quarter financial results and outlook were in line with expectations and the data center unit delivered growth. But a new financial reporting structure highlighted how mobile is a money pit for the chip giant.

The company reported first quarter earnings (statement, preview) of $1.9 billion, or 38 cents a share, on revenue of $12.8 billion. Wall Street was expecting earnings of 37 cents a share on revenue of $12.8 billion. As for the outlook, Intel projected second quarter sales of $13 billion, give or take $500 million.

Wall Street was looking for second quarter sales of $12.96 billion.

But the breakdown of Intel's units was notable. For instance, Intel's Internet of things group, which includes technologies used in retail, delivered first quarter revenue of $482 million, up 32 percent from a year ago. The mobile and communications group had revenue of $156 million in the first quarter, down 61 percent from a year ago.

Here are the groups under the new structure:



Given Qualcomm's dominance, Intel's mobile losses aren't that surprising, but do indicate that the chip giant has missed a key curve.

CEO Brian Krzanich did indicate that Intel was more upbeat about the mobile business as the company shipped 5 million tablet processors and outlined an LTE platform. In prepared remarks, CFO Stacey Smith said the first quarter played out about as expected. 

On a conference call Krzanich said:

2014 is off to a solid start with our first quarter closing much as we expected. PC client platform unit volume was up year-over-year for the second consecutive quarter. Even as challenges remain in the consumer client segment, we saw continued improvement in enterprise clients driven by increasing form factor innovation and refresh. Mobile unit volume was up year-over-year for the first time since Q2 2012 while desktop units were flat year-over-year with all-time record core volume and mix.

While the Internet of things and mobile divisions reperesent the future, the meat and potatoes for Intel remains PC and server chips. PC client group revenue was $7.9 billion, down 1 percent from a year ago. Intel did say that PC demand stabilized. The data center unit had first quarter sales of $3.1 billion, up 11 percent from a year ago.

For 2014, Intel reiterated that it expected flat revenue growth and gross margins of about 61 percent.

Topics: Hardware, Intel, Processors

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  • Smoke and mirrors ...

    "Intel's Internet of things group, which includes technologies used in retail" - thus disguising the real progress of their 'Internet of things' section which, let's face it, will grow directly out of mobile; which is their Achilles' Heel.

    When a company lumps things together which don't belong together, there's always a reason, and never a good one.
  • Sick the government on Google

    Google is the accelerant in the race towards the bottom. This company keeps price dumping, making other companies' stuff worthless. Why doesn't everybody sick antitrust regulators on Google?
    P. Douglas
    • On what?

      They might undersell their phones and tablets but they in no way own the market and are in fact a very small player. They don't charge for their products such as search, email, etc and they do not seem intent of driving everyone out of business and then charging. Heck, Bing now has 18% search share and is growing every year.

      What are you going to charge them antitrust against?
      Rann Xeroxx
  • Full Windows

    I think Baytrail now makes full Windows tablets viable and with Microsoft's push into One Windows, the ability to run Metro apps on the desktop, not charging for Windows on devices 9" and less and on phones, I think you will see the Windows segment of mobile driving Intel's mobile chip sales.
    Rann Xeroxx
  • Solid results???? Intel is losing BILIONS.

    @Larry Dignan

    Do you write for the Motley Fool by any chance?

    " In 2013, Intel's mobile chip division lost a hefty $3.15 billion, after posting an operating loss of $1.78 billion in 2012. In the first quarter of 2014 alone, the Mobile and Communications Group saw a $929 million operating loss on a meager $156 million in revenue, according to new financial results issued today by the company."

    Try telling it like it is. Intel is eating it's young and it's stockholders money.