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Intel is still banking, but it is clearly feeling the heat from ARM

CPU kingpin Intel Corp. (INTC) in Q3 2012 raised eyebrows posting its first decline in revenue in 12 years, despite beating a gloomy analyst outlook.  Now it's repeated that trend, posting up to a 7 percent drop in various divisions revenue, despite a better than expected taxation rate of 23 percent (Intel expected 27 percent).

Intel still pocketed $2.5B USD in net revenue for Q4 2012 and $11.0B USD in net revenue for the year.  Net revenue for the quarter was $13.5B USD and for the year was $53.3B USD.  Despite the lag, Intel continued to reward shareholders with dividends and stock repurchasing.  In fact, it spent $2.1B USD, or roughly 84% of its profit on those measures in Q4.

Paul Otellini, Intel president and CEO, who is in the process of retiring comments, "The fourth quarter played out largely as expected as we continued to execute through a challenging environment.  We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing."

Intel finds itself in strange and unfamiliar territory.  At the 2013 Consumer Electronics Show, sources close to Intel complained that the coalition of chipmakers led by ARM Holdings Plc. (LON:ARM) were colluding to put Intel chips at a disadvantage in the mobile (tablet, phone) market price-wise.  That's a pretty intriguing turn as Intel for decades is accused of doing exactly that in the PC market.  But perhaps now the tables have turned.

With the traditional PC seeing a shrinking role in many users' lives, Intel is seeing declining chip growth.  Some analysts are calling it the next Research in Motion, Ltd. (TSE:RIM) a pretty bold accusation.

2013 should be a critical test for Intel.  It's getting more serious on the mobile front, and it's predicting that it will reverse the declines and post "low single-digit growth".  If it misses that target, expect a bloodbath from investors, despite Intel's continued efforts to reward them with share repurchasing and dividends.

Sources: Intel, Quartz

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By p05esto on 1/22/2013 12:44:44 PM , Rating: 2
Just because people are ALSO buying smart phones, tablets and light-weight devices like that doesn't mean that most people also still need real computers/laptops/workstations/servers/etc. The world still needs powerful CPUs and that need won't ever go away. Intel leads the pack and can't be touched at the high end right now, and frankly even in the middle.

The main issue I see is that we're at a point where a well maintained PC can last many years and there isn't the need for faster CPUs just to run games and software (yes, in some cases). I have a 4yr old laptop that runs Photoshop, Visual Studio and a dozen other apps all at the same time and fast. Stick some cheap RAM and a SSD in there and you are right back in 2013.

Intel needs more software and reasons that people need a faster PC. To surf the web and work in Office any 5yr old system will do the job.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

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