OAKLAND, Calif. -- Intel reported better than expected financial results and a record-breaking full year revenue of $55.9 billion. In a conference call highlighting his first full year, Intel’s CEO said the company is “in a very different place” than it was 12 months ago and finished the year with a strong fourth quarter.
2014 revenue grew 6% while operating income rose 29% to $15.3 billion and net income hit $11.7 billion. Intel generated approximately $20.4 billion in cash from operations, paid dividends of $4.4 billion, and used $10.8 billion to repurchase 332 million shares of stock. Fourth quarter revenue was $14.7 billion and operating income was reported at $4.5 billion, with a net income of $3.7 billion.
"We met or exceeded several important goals: reinvigorated the PC business, grew the data center business, established a footprint in tablets, and drove growth and innovation in new areas,” Intel CEO Brian Krzanich said in a release, adding that the company will “improve our profitability in mobile, and keep Intel focused on the next wave of computing" in 2015.
Revenues from the PC Client Group (PCG) and data center business outperformed expectations set earlier this year. The Data Center Group reported revenue of $14.4 billion, up 18% year-over-year while the newly formed PCG reported revenue of $34.7 billion, up 4% percent from 2013. Revenue from the Mobile and Communications Group, which merged into PCG last year, dropped 85% to $202 million.
Krzanich said Intel has succeeded in its goal to stabilize the PC business with a 25% increase in operating profits where the company had previously expected a decline. He noted that Intel exceeded its 40 million tablet shipment goal by 6 million units and wouldn’t work to outpace the mobile market.
Instead, Intel will focus on driving down costs for the mobile/tablet businesses by $800 million. Intel officials expect the introduction of its inexpensive smartphone chips -- the Sofia 3G and Sofia LTE -- later this year to “progressively reduce bill of materials costs that affected margins in the mobile chip business.”
Much of this $800 million dollar decrease will come in the latter half of 2015, CFO and Executive Vice President Stacy Smith said. The Sofia 3G modem has finished internal qualification and is undergoing certification from carriers while the LTE modem will undergo the same process later this year.
Smith said the ramp up of LTE, expected in the back half of 2015, will offset some investments made in 2014. While many chip-related investments will play out later in the year, Smith expects the company’s investment profile to make for a yearlong contribution to the $800 million reduction effort.
Other highlights from the fourth quarter earnings call include:
- The Internet of Things Group reported revenue of $2.1 billion in 2014, up 19% from 2013. Q4’2014 revenue was $591 million, up 12% sequentially and 10% year-over-year.
- Fourth quarter revenue from the software and services operating segments was $557 million, flat sequentially and down 6% from 2013. Full year revenue was up 1% to $2.2 billion.
- R&D plus MG&A spending will reach approximately $20 billion in 2015, largely due to existing research and development costs from its Axxia Networking buy.
— Jessica Lipsky, Associate Editor, EE Times