Intel Sees Gains From Transformation, but Challenges Continue
The chip maker says its data center and IoT businesses are growing, but that a struggling PC market and global economic issues remain.Intel executives are beginning to see some positive results from their efforts to expand into growth areas and reduce dependence on the contracting global PC market. But the continued decline in system sales and macroeconomic issues in regions like China are conspiring to get the company off to what CEO Brian Krzanich is calling a "soft start" to 2016. The chip vendor on Jan. 14 reported that revenue in the fourth quarter 2015 came in at $14.9 billion, a 1 percent increase over the same period the year before. Net income dropped 1 percent to $3.6 billion. For the year, revenue fell 1 percent, to $55.4 billion, and net income dropped 2 percent, to $11.4 billion. In a conference call with analysts and journalists, Krzanich noted that Intel's financial numbers were able to remain essentially flat even as the global PC market continued its years-long decline. Earlier in the week, Gartner analysts reported that in 2015, PC shipments fell 8 percent, to 288.7 million units. IDC analysts said 2015 marked the first time since 2008 that shipments fell below 300 million for the year. PC sales have fallen since late 2011, when shipments of mobile devices like smartphones and tablets began taking off. The decline has hurt PC and component makers, and Intel is no exception. It's Client Computing Group, which accounts for 60 percent of its revenues, fell 1 percent for the quarter and 8 percent for the year. Krzanich and industry analysts expect that 2016 will be another slow year for the market, though it could pick up in the second half as more consumers and businesses users, many of whom are working on PCs that are three to five years old, begin to buy new ones that run Microsoft's new Windows 10 operating system and are powered by Intel's new "Skylake" processors, offering better performance, power efficiency and security.
“We saw about a year without desktop enterprise upgrades," Krzanich said, adding that the company is "hearing very good response in terms of people's interest in new form factors."