Intel's Q1 solid, but mobile losses weigh

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.
Written by Larry Dignan, Contributor

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.

Editorial standards