Intel betting on its 2012 pipeline

CEO Paul Otellini said that the chip giant has a "tremendous product and technology pipeline." But only Intel's data center dominance is a slam dunk.

Intel's fourth quarter results delivered few surprises given its previous profit warning, but the company hit an optimistic tone for 2012 as it bets its mobile strategy and ultrabook push pays off.

The chip giant reported fourth quarter earnings of $3.4 billion, or 64 cents a share, on revenue of $13.9 billion. for 2011, Intel reported earnings of $12.9 billion, or $2.39 a share, on revenue of $54 billion. CEO Paul Otellini called 2011 "exceptional" and the financials broke records.

In addition, Intel said it was expecting first quarter revenue of $12.8 billion, give or take $500 million. In other words, Intel could crush Wall Street's first quarter projections of $12.77 billion or miss that target by a country mile.

What's the worry? Intel's 2012 roadmap may not pay off. Otellini said that the chip giant has a "tremendous product and technology pipeline." That's true, but there are significant wild cards to consider. First, Intel's ultrabook efforts may not resonate with consumers and businesses. Meanwhile, Intel's smartphone and tablet chips need to show they can push out ARM-based devices. The only sure bet for Intel is that it'll continue to dominate the data center.

Overall, it appears that Intel is betting that its fourth quarter, which was lower than expected due to hard drive shortages, was a blip.

The outlook breaks down like this:

  • Intel projected gross margins for the first quarter of 63 percent.
  • 2012 capital spending will be $12.5 billion, give or take $400 million.
  • R&D spending in 2012 will be $10.1 billion.

Here's a look at Intel's business unit performance.


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