SAN FRANCISCO—Intel Corp. Tuesday (Oct. 18) reported record sales of $14.3 billion for the third quarter, up $3.2 billion or 29 percent year-over-year.
The chip giant's operating income was up 22 percent year-over-year, reaching a record $5.1 billion. Net income was also up 24 percent year-to-year to $3.7 billion.
Earnings per share were also at an all-time high of 69 cents, up 17 cents or 33 percent year-over-year.
Intel's third quarter sales topped consensus analysts' expectations, which called for sales of about $13.9 billion, according to Yahoo Finance.
Aside from the firm's double digit growth, another cause for celebration at Intel was the surge in notebook PC demand this past quarter, showing the market that the personal computer was still alive, despite analyst commentary to the contrary.
The PC Client group saw its revenue skyrocket by 22 percent year-over-year to $9.4 billion.
Intel CEO, Paul Otellini said on an earnings call that he was “very pleased” with the “very strong quarter,” his company had experienced, especially with “the momentum in the PC microprocessor business.”
Intel’s data center sales, too, saw some impressive growth this quarter with revenue up 15 percent year-over-year to $2.5 billion, while other Intel architecture groups saw revenue rise by 68 percent year-over-year.
The chip maker’s Romely server platform was also said to be shipping for revenue with demand reportedly 20 times that of the previous Nehalem server platform in the same time frame after launch.
In fact, the only loser in Intel’s earnings this quarter appears to be the firm’s lower-powered Atom chipset, which posted revenue of $269 million, down 32 percent year-over-year.
An analyst told EE Times that the drop in Atom revenue was mainly due to Intel “eating its own young with lower cost notebooks and the continued rise of tablets,” though the impact was very small in terms of the firm’s overall revenues.
Otellini did re-affirm Intel’s commitment to the platform, noting that development on Medfield-based smartphones and tablets was ongoing and on track for devices to be released in the first half of 2012.
Otellini added that Intel had tailored Atom better for different devices, in order to more successfully compete with ARM’s offerings, but the CEO brushed off any suggestion of a significant threat from its British based competitor.
“Loss to ARM will be marginal because Intel offers legacy support which ARM does not,” explained Otellini adding that the launch of Microsoft’s Windows 8 would be to Intel’s advantage, noting “New releases of Windows have typically benefited Intel nicely.”
The Intel chief also briefly discussed the first generation of Ultrabooks --coming out already in time for holiday season at price points under $1000—saying this was “just the beginning” and that the future would be characterized by Ultrabooks with always-on capability and touchscreens at affordable prices.
Otellini confirmed that over 70 design wins for the ultra-slim laptops were already in the pipeline and that efforts to target “mainstream price points” were firmly underway.
Whereas today Ultrabooks could range in price anywhere between $899-$1100, Otellini said future target price points were set to be significantly lower at around $699. The Intel CEO did however caution that thin came at a premium in today’s market, but that this cost would decrease over time.
Otellini also noted the increasing engineering difficulties when it came to resolving consumer demand for more performance and longer usage time saying, “We’re solving problems a full generation ahead of anyone else.” More performance, he said, required more transistors, making things especially tricky in a battery constrained environment.
In terms of competition with its other chip rival, AMD, Intel did admit to picking up some revenue at its competitor’s expense this quarter but added graciously that it wasn’t by much.
Even relatively new purchase MacAfee added value to Intel’s balance sheet this quarter, posting $1.1 billion in revenue along with Intel’s Mobile Communications business unit.
Asked whether the catastrophic floods in Thailand might affect Intel’s financials next quarter, CFO Stacy Smith said he didn’t believe there would be any impact as the firm had plenty of alternative sources and inventory to carry it through.
Intel’s gross margins remained high in the third quarter at 63.4 percent, though that did fall slightly short of the company’s expectation by 0.6 percent.
For the fourth quarter, Intel said it expects sales of between $14.2 billion and $15.2 billion.
I am not sure how much Ultra book would be able to compete with the planet of tablets. Moreover, by adding more peripherals to the Ultra book, which would be lacking on tablets, will first, make the ultra bigger, and defeat portability. This would push Intel to trade off the connectivity ( in form of peripheral ports ) and size. I am not sure if this would go the net-book way!
Though a snag for Intel in low power technology in 2010/11, Intel still has a larger punch in potential than the ARM collection of products. In addition, when users look beyond the traditional low-end applications the value proposition of Intel products should benefit the market and lead to further growth. In addition, Intel undertands the need for PMIC requirements along with CPU and components that will eventually bring on a competitor that ARM may never have an opportunity to touch.
The ultra book with touch screen for this december and ultra slim laptops for the next year and the Atom based new products R&D are quite neatly planned to attract customers.So there is always a great future with windows8 to both Intel,Microsoft and ourselves.
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