DailyTech - Intel Posts $2.3 Billion Profit for Q4 2009, Predicts Strength in New Year

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Hardware Intel Posts $2.3 Billion Profit for Q4 2009, Predicts Strength in New Year
Jansen Ng (Blog) - January 15, 2010 5:35 PM

33 comment(s) - last by theapparition.. on Jan 18 at 9:24 AM

No recession for Intel

Intel is often seen as a bellwether for the technology industry, and particularly so as the world creeps out of the global recession. The world's largest semiconductor company touched bottom in the first quarter last year, but saw a signs of a recovery in the second quarter despite a $1.45 billion fine by the European Commision.

The third quarter was where things really turned around, and Intel expected even better for the fourth quarter thanks to Windows 7 and the new hardware upgrade cycle it would spawn. Those prediction have now come true.

The company reported revenue of $10.6B and profits of $2.3B for Q4, despite paying out $1.25B to its chief competitor AMD in a a major cross-licensing settlement. To put things in perspective, net income is up 875% over the same period from 2008. Gross margins reached a record 64.7%. Intel posted revenue of $35.1B and an overall profit of $4.4B for all of 2009.

"We have seen a return of consumer demand and replenishment to normal inventory levels after the precipitous demand drop at the end of 2008 and the beginning of 2009. The fourth quarter was consistent with this trend, with unit shipments seasonally up in the typically higher fourth quarter. In addition, we experienced higher average selling prices due to a mix shift to our latest generation of processors," stated Stacy Smith, the company's Chief Financial Officer.

The future looks bright this year for Intel as it ramps up production of new 32nm CPUs. It introduced 32nm Westmere-based Clarkdale and Arrandale chips this month, as well as started shipping N450 Pineview Atom CPUs.

Six-core 32nm Gulftown CPUs will be introduced fairly soon, but it is the energy efficient 32nm server chips that will bring in big profits. The new Sandy Bridge architecture and will also be introduced around the timeframe of the 2010 Intel Developer Forum. The first 32nm Atom CPUs will be shown at that time as well.

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875%?

By Leper Messiah on 1/15/2010 5:43:20 PM , Rating: 2

That seems like quite a boost in income for such an established company like intel

RE: 875%?

By Seemonkeyscanfly on 1/15/2010 6:17:03 PM , Rating: 2

You must remember more and more devices are using little CPUs in them... Then you must think about all the things Intel makes - CPU, mice, keyboards, NIC, and so on... The more importantly how long have companies not been replacing old equipment. Now this old equipment will just not work with new software, should have not work with last OS, but people managed... So, it had to happen, the question will be, will it last.

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RE: 875%?

By Sazar on 1/15/2010 6:18:54 PM , Rating: 2

Intel makes mice?

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RE: 875%?

By StevoLincolnite on 1/15/2010 8:22:26 PM , Rating: 2

They used to make web cams as well...

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RE: 875%?

By Oregonian2 on 1/15/2010 9:29:15 PM , Rating: 2

I think Microsoft was being thought of (Mice, Keyboards). Different mega company.

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RE: 875%?

By Major HooHaa on 1/17/2010 8:06:31 AM , Rating: 2

Yes, I have owned an Intel Optical USB Intellimouse for a number of years now.

I was fed up with the old tracker-ball mice getting clogged up and so bought this one with its mousewheel and 5 buttons.

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RE: 875%?

By Major HooHaa on 1/17/2010 12:25:48 PM , Rating: 2

Sorry, my mistake, I had a brain freeze and got two big companies involved with computers mixed up...

My mouse is a Microsoft Optical USB Intellimouse. It must have been the "Intelli" bit that messed with my mind.

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RE: 875%?

By RamarC on 1/15/2010 6:26:51 PM , Rating: 4

not really considering the recession. in last quarter of 2008, they only make $234M... this past quarter, they made $2B or 8.75 times as much.

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RE: 875%?

By hellokeith on 1/15/10, Rating: 0

$2.3 Billion in profit just in Q4?

By banvetor on 1/16/2010 11:40:40 AM , Rating: 2

One word: WOW.

I think that maybe AMD really undershoot the value it asked for compensation in the agreement with Intel. I mean, half of a QUARTER profit for all the dirty tricks that they did?

I think they could have easily asked for the triple or quadruple of that and still get the other very important part of the agreement which was to be able to go fabless.

RE: $2.3 Billion in profit just in Q4?

By MandrakeAU on 1/17/2010 7:28:00 AM , Rating: 2

It's even crazier than you think. That 2.3BN profit is AFTER Intel paid AMD the 1.25BN as part of the settlement. AMD should have insisted on more cash. It's not like Intel is short on money! :O

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To put things in perspective

By crystal clear on 1/16/2010 4:07:44 AM , Rating: 2

People generally tend to link Intel profits to microprocessor sales,but fail to note a major revenue earner & profits from sales of related chipsets and motherboards designed for the desktop, notebook, and netbook market segments, and wireless connectivity products.

It also applies for the server, workstation, and storage computing market segments, and wired network connectivity products.

Intel focuses on its PC Client Group & Data Center Group to bring those bumper revenues/profits.

A dirty company

By blowfish on 1/15/10, Rating: -1

RE: A dirty company

By kaoken on 1/15/2010 7:28:00 PM , Rating: 1

Right dirty tricks alone crushed AMD and not engineering dominance with C2D series.

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RE: A dirty company

By damianrobertjones on 1/15/2010 7:44:08 PM , Rating: 5

Back in the P4 days Intel made a mistake and AMD should have really done very well... forget what came after as he's talking about 'that' period.

For example, I went along to get a new CPU, AMD, from insight.com/uk. I typed in AMD into the search bar and the FIRST page only showed INTEL cpu's. !!?? Huh? Second page, then the AMD products started appearing. Closed the window and did it again. Same reseult.

I sent a mail to Insight suggesting that they 'fix' the situation, explaining that I would post my findings to the web. An hour later I came back, did the search again....

AMD cpu's on the first page.

Funny that

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RE: A dirty company

By theapparition on 1/18/2010 9:24:18 AM , Rating: 2

quote:
Back in the P4 days Intel made a mistake and AMD should have really done very well

What short memories you fanboys have.

P4 was/is one of the most successful processors in history. Original P4's (Willamette) were a disappointment only due to performance/clock. Overall performance was decent though, and better than most comparable AMD offerings. Athlon XPs were a year late and didn't match up particuarly well. Not to mention the piss poor design, such as runaway thermal conditions and no internal protection. How many AMD systems did enthusiasts fry?

Willamette didn't last too long though, replaced by the excellent Northwood. Northwoods were phenomenal, exceding the performance of anything AMD had to counter with. Only at the end of it's product line (in 2004), when AMD released the Athlon 64 (with x64, IMC, Hypertransport) did AMD have a dominant winner. The Athon 64 was a faster chip, but even still the Northwoods excelled at some benchmarks.

Prescott on the other hand was a flop, and performance of AMD's offerings continued to increase. Even benchmarks where intel enjoyed dominance due to SSE extensions were wiped out due to the superior processing power of the Athlon 64's.

AMD's performance dominance lasted until 2006, when Intel released the Core architecture, and I don't think I need to explain the rest.

Intel has been making the heart of PC's for more than 30 years. They had 2 bad years (2004-2006) where they couldn't compete performance wise. You're surprised AMD didn't capture more marketshare? This is an industry where IT departments move slower than molasses making a change and most companies are still stuck on WinXP.

AMD was always a value/performance leader, they increased marketshare due to thier excellent offerings for a few years, but now they are once again in the position of being a value, not performance option.

Say what you want about Intel's business practices, I won't go there and courts will decide that matter, but to claim the P4 was a failure is just ridiculous. Most of the P4 line was excellent, and quite frankly, superior to the AMD offerings.

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RE: A dirty company

By quiksilvr on 1/16/2010 2:22:48 PM , Rating: 4

They have paid for their mistake in billions of dollars. Lets just move on now, people. Microsoft did it in the past and paid for it in billions and is now a great company giving us consoles, PMPs, and not to mention a much better Office and OS.

Yeah, their browser still sucks, but the biggest difference between now and back in the '90s is that they're actually TRYING to fix it. Lets hope we see similar actions on Intel's part.

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RE: A dirty company

By AstroGuardian on 1/18/2010 5:30:21 AM , Rating: 1

As long as the company does not feel the cold steel and is doing right, it will NEVER try to fix anything. It will just leave the customers to pay for it's mistakes.

This applies to America too. As long as it thinks it's the most powerful military force in the world it will never stop the atrocities it does around the world

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RE: A dirty company

By MadMan007 on 1/15/2010 8:12:43 PM , Rating: 2

It's also a measure of AMD being constrained by manufacturing capacity. Plus 'no one ever got fired for buying Intel'...iirc AMD was doing quite well at that time in the consumer arena but not so much in the much larger business arena.

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RE: A dirty company

By Oregonian2 on 1/15/2010 9:37:21 PM , Rating: 2

AMD also dominated the consumer market because their chips were cheaper. Good for sales, but lowers their total sales revenue. Particularly because consumer market PC's would be ones where the price negotiated for the CPU would have to be stripped down to the bone.

That said I bought only AMD chips for all my computers between my 486 and my current Conroe machine. And they being less expensive for similar performance had a lot to do with it (despite they probably having higher production prices with they always being behind Intel in their FAB processes, which they still are).

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RE: A dirty company

By JumpingJack on 1/15/2010 9:54:24 PM , Rating: 2

They did loose a boat load of market share to AMD, at one point AMD controlled as much as 80% of the desktop retail market.
http://www.dailytech.com/article.aspx?newsid=1120

AMD even recorded a string of 14 quarters of marketshare gains before their first massive 'perfect storm' loss:
http://www.crn.com/hardware/199200068;jsessionid=1...

quote:
"After 14 consecutive quarters of gaining share, the first quarter was a major setup in the strategic transformation of our company," Meyer said, noting that AMD's expanding number of customers, channels and products has led to increased complexity and that the company is working to better manage its changing business.

The question isn't why AMD didn't gain share, they gained enormous share, so much so that Intel laid off 10000 to make up for the revenue losses.
http://www.msnbc.msn.com/id/14679917/

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RE: A dirty company

By SandmanWN on 1/17/2010 12:20:45 AM , Rating: 3

quote:
They did loose a boat load of market share to AMD, at one point AMD controlled as much as 80% of the desktop retail market.

That would be the US retail market only. Overall the market share grew only slightly to about 25%.

quote:
The question isn't why AMD didn't gain share, they gained enormous share

Seems a bit revisionist. Everyone knew why they were gaining a greater share of the "retail" market, they were undercutting Intel by about $200 a desktop. On the laptop side AMD had a much harder time in the retail market. They couldn't undercut Intel and their laptops suffered a $100 price disadvantage.

Of course they couldn't get the top OEM's which would have been a tremendous help in getting worldwide acceptance and overall market share dominance and we all know the reasoning behind that these days. Its truly a wonder how they ever got to 40% share in the server market.

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RE: A dirty company

By JumpingJack on 1/17/2010 1:33:09 AM , Rating: 1

AMD gained share, most of it in desktop and server, as Dirk Meyer said in 2006, for 14 consecutive quarters. AMD has almost always bounced around 40-60%, with a high as I referenced of 80% in retail in most markets, US or otherwise.

The OP was bewildered that AMD did not have success with K8 during the P4 days, and the facts are they did ... they gained share steadily from the moment it launched.

You are correct, though, retail is simply consumer (where about 50/50 choose AMD or Intel), and retail is around 10% of the total market. The real money is in enterprise where AMD has not had as much success.

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RE: A dirty company

By exdeath on 1/16/2010 2:04:39 AM , Rating: 2

AMD made the same mistake Intel did. They got cocky and sat on their butt high and mighty with their one chip, all their eggs in one basket, and didn't have anything new to spank the competition when their one and only trump card became obsolete.

1) Intel sits on butt recycling the same crap over and over.

2) AMD creates all new platform that owns anything Intel has.

3) Intel didn't see it coming, has nothing new in the pipe to compete, and instead tries to push their existing line harder and fails.

4) AMD riding high.

5) Intel comes back with ground up architecture that spanks AMD.

6) AMD did not plan for the future beyond Athlon64, tries to offer overclocked Athlon64 derivatives to compete, but fails, and becomes second place again.

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RE: A dirty company

By blowfish on 1/16/2010 9:25:04 AM , Rating: 2

it's gratifying that there have been no Intel or AMD Fanboy posts in this thread! +1 all round for that.

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RE: A dirty company

By intelpatriot on 1/17/2010 6:43:25 AM , Rating: 2

Kind of.

The core 2 isn't a new architecture (not even a 'new' x86 archticture).

It was a 'ground up' revision of the existing mobile architecture resulting in processors that were modestly (not as much as ppl them seem to think) clock for clock ahead of AMD. But couple that with
1) Intel's process advantage (which is considerable) and,
2) Intel's compiler locking out code-paths for non-Intel CPUs
and the rest is history.

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RE: A dirty company

By retrospooty on 1/17/2010 10:19:05 AM , Rating: 2

True, Core2 wasnt a new architecture, it was a massively revamped Pentium M , which was itself a revamped P3...

But the point is, new or not it was way faster. Intel generational bumps usually were just that, minor speed bumps. The Pentium 4 to Core2 was a HUGE jump. That was in summer 2006 and its still the threshhold of a decent PC. If you had a PC with a P4 in it, its pretty well obsolete. If you have an original Core2 duo, its still pretty fast. Fast enough for most anyone.

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RE: A dirty company

By SPOOFE on 1/17/2010 10:09:49 PM , Rating: 2

quote:
Intel's compiler locking out code-paths for non-Intel CPUs

Insignificant. Intel's compiler got an advantage because Intel was oft first to market with new technologies, such as SSE extensions. And Intel's compiler was hardly the only one - or the most used, by a wide margin, if my memory serves - available for coders.

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RE: A dirty company

By AstroGuardian on 1/18/2010 5:57:20 AM , Rating: 2

Ahhh.... that thought is so shallow. So you think AMD was sitting on it's big fat butt? Even the first year student of economy will tell you that it's not what companies do while being King of the Hill

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RE: A dirty company

By Calin on 1/17/2010 7:25:00 AM , Rating: 2

AMD did not have the production capacity to use that advantage.

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RE: A dirty company

By Major HooHaa on 1/17/2010 7:57:05 AM , Rating: 2

In the Pentium 4 days, the average PC buyer knew that Intel was the big, well known CPU manufacture. And this is what kept the Athlon 64 from gaining a bigger share of the market than it actually did.

I am not too bothered about the latest Clarkdale processors. The fact is that they give an inferior performance to the previous i7 900 and 800 series processors. From what I can see, it isn't until the 6 core, hyperthreaded Intel processors come along that the i7 900 Bloomfield series will be out performed. The likes of Clarksdale’s have sacrificed processor performance in favour of integrated graphics. But they do have the advantage of a reduced overall computer power consumption.

A friend of mine has just upgraded to an overclocked Intel i7 920 with 6 GB's of RAM, which is seriously quick. I bet the sales of i7 920's is a factor in Intel's latest profits.

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RE: A dirty company

By Laereom on 1/17/2010 11:54:12 AM , Rating: 2

The fact of the matter is, during that era, AMD -did- do fabulously.

Their marketshare climbed significantly -- to the point where they sold every single chip they made, and their average selling price skyrocketed.

However, manufacturing limitations, and their own relative obscurity compared to Intel held them back. By the time they started becoming known as a high-quality manufacturer of CPUs by even your average tech guy, their era of dominance was over, thanks to the Core 2 Duo. The fact that this was also around the time laptops were shifting to the dominant form factor didn't help either, since their mobile offerings were woefully inadequate.

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RE: A dirty company

By SPOOFE on 1/17/2010 9:47:05 PM , Rating: 2

quote:
For me, that's the true measure of the dirty tricks campaign that Intel were able to mount.

Really? Because it should stand as a testament to the inadequacy of AMD's marketing guys. Good tech or bad tech, AMD has always had a lousy time grabbing mindshare or getting their name into public awareness. Attributing it all to Intel's vaguely defined "dirty tricks" borders on conspiracy theory.

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