Intel Hammered by Sliding PC Sales, but Predicts Rebound
Overall, in the first quarter, Intel saw revenues drop 2.5 percent over the same period last year, to $12.58 billion, and income drop to $2.05 billion, from $2.74 billion in 2012. The company is projecting revenues for the second quarter to come in between $12.4 billion and $13.4 billion. While the vendor's PC chip business continued to struggle, Intel's Data Center Group saw revenues jump 7.5 percent, to $2.6 billion. The earnings announcement came a week after Intel unveiled new data center chips at the Intel Developer Forum in Beijing, including "Avoton," an Atom SoC aimed at low-power microservers, and the Xeon E5 "Ivy Bridge-EP" and Xeon E7 "Ivy Bridge-EX" processors for traditional servers. The new chips represent an effort undertaken during Otellini's tenure to expand the reach of its silicon technology beyond just PCs and servers and into a wider range of systems, from microservers, high-end servers and mobile devices to embedded systems, storage products and networking. "We compete wherever there is computing," Otellini said.An Intel spokesman said during the earnings call that the search for Otellini's replacement was on track, and plans were still in place to name the next CEO before the end of May. TBR analyst Belanger said the next CEO will play a key role in determining how the company does in its efforts to extend the reach of its technology. "Intel's choice for its new CEO will establish the company's long-term direction, and TBR believes there is a strong chance the new company leader will have a background in mobility, increasing the possibility a new CEO will come from outside of the company for the first time in its history," he wrote. "In the short term, customers will delay purchasing while there is significant uncertainty surrounding Intel's long-term direction."
Otellini, who has spent more than 40 years with Intel, including the last eight as CEO, is due to retire next month. He announced his retirement as the company's fifth CEO in November 2012, and the company has yet to name a successor, with speculation ranging from a number of candidates inside Intel to several outside the company, such as ex-Intel executive and current VMware CEO Pat Gelsinger.