Intel Sees Record 2011, Looks to Mobile Push in 2012
Intel just completed a year in which it hit record financial numbers, including exceeding $50 billion in revenue for the first time, despite lingering softness in the core PC market. However, it will be the giant chip maker's performance in 2012 that will determine how it goes forward over the next few years.
This will be the year that Intel, the world's largest processor manufacturer, starts carving deep inroads into the highly competitive and booming mobile computing space, not only in smartphones and tablets, but also with its ultrabook super-thin-and-light notebook initiative.
"Our intent is to participate broadly in all markets," Intel President and CEO Paul Otellini said Jan. 19 during a conference call with analysts and journalists to talk about the company's fourth-quarter and 2011 financial numbers.
And Intel's aggressive-and much talked-about-push into the mobile space will come from a position of financial strength. According to numbers released by Intel, the chip maker generated $13.9 billion in revenue during the last three months of the year, a 22 percent jump over the same quarter in 2010, and netted $3.4 billion, a rise of 6 percent year-over-year.
For all of 2011, Intel had $54 billion in revenue, a 24 percent increase over 2010, when it passed $40 billion in revenue for the first time. The company had a net income of $12.9 billion, a 13 percent spike over 2010.
Otellini and Chief Financial Officer Stacy Smith outlined highlights of the year, including a PC business that saw a 17 percent increase in revenue, thanks in large part to enterprises and emerging markets, including India and Brazil. Otellini said that currently two-thirds of the PCs sold worldwide are in emerging markets, and that China has become the world's largest market.
The 2nd Generation Core "Sandy Bridge" processors, introduced during the 2011 Consumer Electronics Show (CES), now accounts for about 40 percent of Intel's revenue, he said.
Otellini and Smith said Intel, like other players in the PC business, were impacted by the massive flooding in Thailand during the fall, which deeply cut into hard disk drive (HDD) production. That caused chip orders to slow, but PC sales were still fairly stabling during the fourth quarter and should be in the current one, they said, with HDD supplies getting back up to speed into the third quarter.
The company's Data Center Group also had a strong year, with a 17 percent increase in revenue. Otellini noted that the success was not only in the traditional server business, but in other areas in which the company is growing, including storage, networking and embedded systems. Intel is readying the release of its eight-core Xeon "Romley" server processor this quarter.
Looking forward, Intel is expecting revenue to come in around $12.8 billion, with the increase in revenue over 2012 growing in the high single digits.
A lot of scrutiny for the year will be on Intel's mobile computing efforts and ramped-up competition with ARM Holdings, whose designs dominate the space. Intel put its efforts on full display at the CES 2012 event this month, showing off an upcoming phone from Lenovo that will be powered by Intel's "Medfield" system-on-a-chip (SoC) for smartphones. Intel also is planning phones with Motorola.
Otellini said the company over the year will become a growing player in the tablet space, and said that OEMs have more than 70 ultrabook designs based on Intel's upcoming 22-nanometer "Ivy Bridge" processors, which are due in the spring.