Intel Results Underwhelm Investors

Intel earned net income of $4.3 billion on revenues of $18.3 billion in the quarter ending September 30, disappointing Wall Street: Overall, income and revenues both fell, and Intel’s datacenter business is starting to drop off.

“Our teams delivered solid third-quarter results that exceeded our expectations despite pandemic-related impacts in significant portions of the business,” Intel CEO Bob Swan said in a prepared statement. “Nine months into 2020, we’re forecasting growth and another record year, even as we manage through massive demand shifts and economic uncertainty. We remain confident in our strategy and the long-term value we’ll create as we deliver leadership products and aim to win share in a diversified market fueled by data and the rise of AI, 5G networks and edge computing.”

The problem for Intel is that the massive gains it made in the previous two quarters thanks to the COVID-19 pandemic and the resulting boom in PC sales has collapsed: Intel’s revenues grew over 20 percent year-over-year (YOY) in the past two quarters, but revenues fell 5 percent this past quarter.

“We saw much stronger PC demand in the consumer and education side [in this quarter], which tends to be the more entry-level for PC notebooks,” Intel CFO George Davis explained of the drop-off. Those computers are much less expensive and much less profitable, for both Intel and the PC makers that sell them. Overall, Intel’s PC business grew just 1 percent in the quarter to $9.8 billion.

More troubling is Intel’s datacenter business: The microprocessor giant says that demand for datacenter chipsets plummeted 47 percent in the quarter after two quarters of massive, COVID-19-based growth. And that business reported revenues of just $5.9 billion, a drop of over 7 percent.

Also problematic, Intel faces more and better competition than it has in decades. Qualcomm and Apple now control the market for chipsets used in personal computing devices, and AMD is eating away at Intel’s PC and datacenter businesses with solid and affordable new offerings. Longer-term, ARM-based chipsets from Qualcomm and others also threaten to steal away Intel’s datacenter business. And NVIDIA—which is purchasing Arm Holdings—this year surpassed Intel as the largest American semiconductor maker, at least by market valuation.

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Conversation 11 comments

  • jchampeau

    Premium Member
    23 October, 2020 - 9:28 am

    <p>It'll be interesting to see if Intel becomes the next IBM and continues to cede mindshare and market share until they are a minor player or if they figure out a way to become the next Microsoft who, it appears, has navigated the transition to mobile and cloud incredibly well.</p>

    • Paul Thurrott

      Premium Member
      24 October, 2020 - 9:24 am

      They can see the asteroid coming. It’s in their hands now.

  • robinwilson16

    23 October, 2020 - 9:34 am

    <p>Could this be the Bob "Swan Song"?</p>

    • Greg Green

      26 October, 2020 - 7:53 am

      <blockquote><em><a href="#588035">In reply to robinwilson16:</a></em></blockquote><p>Why the board would pick as the ceo a guy who didn’t want to be the ceo is a mystery. Maybe most major corporate boards really are dysfunctional.</p>

  • blue77star

    23 October, 2020 - 10:00 am

    <p>Intel is coming back with Alder Lake next year big time. After dealing with garbage from AMD for 6 months, Ryzen being the worst purchase ever I made. AMD -&gt; this company has no merit.</p>

    • ghostrider

      23 October, 2020 - 11:31 am

      <blockquote><em><a href="#588039">In reply to blue77star:</a></em></blockquote><p>What? Seriously? AMD have been eating Intel's breakfast <em>and </em>lunch for 3 years now, yet funnily Intel didn't mention competition from AMD being one of the reasons for their poor quarter. Intel are absolutely up against a wall now, and Zen3 could be one Zen too many for Intel. Yeah, lets see what Alder Lake stacks up as, but if it's on 14nm (as it very well could be), it will run hot, be power hungry, and will have a big hill to climb against the 5000 Ryzens in performance. </p>

    • solomonrex

      23 October, 2020 - 1:35 pm

      <blockquote><em><a href="#588039">In reply to blue77star:</a></em></blockquote><p>Intel has already admitted that they have to use other people's fabs, so they won't have the same profitability or volume that they had before. They're definitely losing Apple's business. MS is close to replacing them. And as far as AMD, you're the only person I've heard complain, while spouting an Intel code name, so I'm skeptical.</p><p><br></p><p>They could very well be fine in the end, but any way you slice it, they have a rough couple years ahead. The monopoly is emphatically over!</p>

      • Paul Thurrott

        Premium Member
        24 October, 2020 - 9:14 am

        They said they were open to using other fabs if that was required to meet the current schedule. I don’t think they’ve actually done so yet.

    • Paul Thurrott

      Premium Member
      24 October, 2020 - 9:23 am

      Wait. What.

    • Greg Green

      26 October, 2020 - 7:49 am

      <blockquote><em><a href="#588039">In reply to blue77star:</a></em></blockquote><p>You were holding it wrong. That’s the only explanation.</p><p>PCWorld sample headlines:</p><p>Ryzen 7 4700U review: AMD's budget 8-core crushes Intel's 10th-gen chips, again</p><p>The best portable gaming laptop, Asus' ROG Zephyrus G14, is $250 off (<span style="background-color: rgb(255, 255, 255); color: rgb(34, 34, 34);">Zen 2 Ryzen 9 4900HS)</span></p><p><br></p><p><span style="background-color: rgb(255, 255, 255); color: rgb(34, 34, 34);">Mah Ung was so impressed with AMD’s recent chips that he wanted one story headline to be Damn!</span></p><p><br></p><p><span style="background-color: rgb(255, 255, 255); color: rgb(34, 34, 34);">You'll see the same type of reviews at Gamers Nexus, Anandtech, etc.</span></p><p><br></p><p><br></p>

  • jimchamplin

    Premium Member
    23 October, 2020 - 6:56 pm

    <p>Well, pretty sure the next PC I own will be AMD or ARM. Just not sure if I’m replacing a PC or Mac next! If it’s this year, it’s an AMD PC. If it’s next year, it will be an ARM Macintosh.</p>


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