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Intel highlights sunnier fiscal outlook for 2015

25 Nov 2014  | Jessica Lipsky

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At this year's Intel investor meeting, company officials said Intel has regained its footing, mobile-wise. The company's fiscal outlook for next year included stabilisation of several divisions and an increase in its cash dividend to 96 cents-per-share. Also, presenters touted Intel's RealSense, a 3D camera sensor and the company's profitable data centre businesses as cornerstones of its 2015 projection.

Brian Krzanich

CEO Brian Krzanich presents at Intel's investor event.

Full year revenue in 2014 is expected to hit $55.8 billion, up six per cent from 2013; Intel's PC Client Group had operating revenue of about $35 billion, a nine per cent increase. The PC Group, which recently merged with Intel's mobile division, expects a slight reduction in profit next year due to higher costs associated with 10nm technology and Broadwell.

CEO Brian Krzanich commented on the company's $1 million revenue loss in its mobile group: You can't stand up here and talk about shipping 40 million tablets without talking about the loss we have. We're not ashamed of it. When you come into a market that's that far along in a maturity curve, you've got to work your way in. You've got to ask yourself: Do I wait until all my products are lined up? Can I afford to be absent from a market, or do I make my move, take my losses, and establish our footprint.

Krzanich said the company is on target to ship 40 million tablets by the end of 2014 and, in Q3 of this year, shipped over 100 million CPUs. Low cost mobile products such as Sofia and Cherry Trail drove demand.

"As we moved to Broadwell and brought out Core-M, devices are getting thinner, that's driven a lot of stabilisation and why we see large forecasts about PCs," Krzanich said. "I wouldn't forecast profitability in mobile for 2016 but there will be improvement. Rockchip and Spreadtrum will start to play a role next year... these are going to take some time to play out as a major portion of our volume."

Kirk Skaugen, SVP and GM of Intel's new PC Client Group, said Q3 notebook business was up 21 per cent. Likewise, Gartner expects sales of Intel-based Chromebook units to triple by 2017 following the introduction of 15 designs this spring. He also estimated that most of the Chinese mobile ecosystem was Intel-based.

Intel is also banking on several cheap smartphone chips planned for 2015, the Sofia LTE and Sofia 3G, to up the mobile ante. Sofia LTE and 3G are 40 per cent and 25 per cent less expensive than Bay Trail, respectively, and "will improve margin structure on tablets."

Officials admitted to debuting 14nm "a little early" and paid for it in performance. The company will be more prudent in signalling the future of its 10nm technology, and executives expect gains from Moore's Law to kick in for the mobile space between 2015 and 2016.

In the meantime, Krzanich said Intel will continue to invest heavily in mobile and communications.

Such investments are paying off while the number of companies investing in the same areas have decreased significantly since 2006. Intel's investment and research into WWAN, wireless connectivity and graphics units are expected to bear fruit down the line. The company said it will spend about $20 billion on research and development next year, plus or minus $400 million.

Intel's PC core IP

Intel hopes to translate its PC core IP into other parts of its business.

"The ability to share IP is really important for us. We think over next few years nearly 20 per cent of the PC market and half of the tablet market will require wireless WWAN connectivity and we'd be locked out of those segments if we didn't have IP to integrate," said CFO and EVP Stacy Smith.

About 70 per cent of Intel's R&D investment is "common across the business," and the company hopes to leverage new technologies in mobile, data centre and PC businesses. Modems are among the devices that will proliferate across Intel's offerings.

"We believe modems are critical for almost every product we'll build... in adjacent products like Internet of Things and tablets, and core businesses like PCs," Krzanich told investors.

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