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Intel posts record earnings, concedes iPad may affect revenue

post #1 of 27
Thread Starter 
Intel beat analysts' expectations with a 59 percent increase in third-quarter earnings year-over-year and a record $11.1 billion in revenue, while cautioning that sales of the iPad may be impacting PC sales.

For the first time in the Santa Clara, Calif., company's history, Intel's quarterly revenue exceeded $11 billion, the company reported on Tuesday.

Intels third-quarter results set all-time records for revenue and operating income, said CEO Paul Otellini. Intel has posted several outstanding quarters in a row, with its most recent third-quarter earnings edging out stellar second-quarter earnings to set the records.

Wall Street analysts were pleasantly surprised by the news, having predicted revenue of $10.99 billion on average, according to a report by the Wall Street Journal. In late August, Intel lowered its revenue forecast for the third-quarter, citing "weaker than expected sales of consumer PCs in mature markets."

During the earnings conference call, Otellini specifically addressed what he called "the big question on everyone's mind:" how Intel will respond to the new computing category of tablets.

Otellini praised Apple for its success with the iPad. "Apple has done a wonderful job reinventing the category," he admitted, going on to say that tablets will "probably" impact PC sales at the margin.

"Consumers will have a limited amount of discretionary income and some will choose to purchase a tablet instead of upgrading an existing PC or purchasing a netbook in any given period."

Despite Apple's early gains in the tablet market, Otellini remains confident that Intel can "win this segment." "We take a longer-term view of the tablet opportunity," Otellini continued. "In the end, it will be additive to our bottom line, and not take away from it."

Otellini reassured investors that Intel is currently working with a number of partners to bring to market tablets running Windows, Android and MeeGo operating systems across a "variety of form factors and price points."

Looking forward, Intel predicts fourth-quarter revenues of $11.4 billion, plus or minus $400 million.

As one of the first companies to report quarterly earnings, Intel is seen as a bellwether. Apple will reveal its quarterly earnings report on Monday, Oct. 18 at 5 p.m. Eastern, 2 p.m. Pacific.
post #2 of 27
perhaps we'll see even more concerted efforts with the Intel Atom platform (i.e., beyond the expected release of 'Cedar Trail' in the second half of 2011).
post #3 of 27
It's the software, stupid.
post #4 of 27
Intel conceding that IPADS are cutting into PC sales is a big concession.
4th Quarter should shed more light on the revenue as the holiday sales are a big event for both APPLE & the PC makers.
post #5 of 27
Quote:
Originally Posted by BUSHMAN4 View Post

Intel conceding that IPADS are cutting into PC sales is a big concession.

although Intel didn't quantify the affect of iPad sales during the past quarter, i wouldn't be surprised if they had some figures that led Otellini to make this statement(s).
post #6 of 27
Quote:
Originally Posted by emacs72 View Post

although Intel didn't quantify the affect of iPad sales during the past quarter, i wouldn't be surprised if they had some figures that led Otellini to make this statement(s).

I think youre spot on. Intel would have their Atom sales and would be able to tell if there was a major change in orders since the iPads release.

But that in itself wouldnt be very telling. Theyd also be able to tell if low-end notebook CPUs were down. Id think from those one could show a trend and determine a cause.

Or maybe Jobs called Otellini and told him what to say if he want to keep the Intel contract in place.
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post #7 of 27
Quote:
Originally Posted by AppleInsider View Post

Otellini praised Apple for its success with the iPad. "Apple has done a wonderful job reinventing the category," he admitted, going on to say that tablets will "probably" impact PC sales at the margin.

Classy. Ballmer could learn from Otellini.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #8 of 27
this article completely overstates what INTC management's tone was like on the call re: iPad. They did concede slight netbook unit sales declines due to iPad but they were extremely guarded about it and said the impact was minimal from what they could tell. Don't get me wrong, I felt strongly while listening that they were intentionally downplaying the iPad's impact but they definitely were not conceding much netbook loss due to the iPad.
post #9 of 27
It doesn't take an analyst to see INTC is a growing enterprise. No doubt they'll produce a kickass mobile chip. In the mobile space I see AAPL and INTC at loggerheads but it shouldn't affect their CPU alliance. I know all this because Kathryn Huberty is giving me -- eh, never mind.
post #10 of 27
Quote:
Originally Posted by macinthe408 View Post

It's the software, stupid.

Not necessarily. They both need to be done equally well and complement each other. Apple hooks both pieces in such an intimate way that I doubt the other players will ever have a product that is truly polished both inside and out.

I think Intel discusses in private that they will never be able to compete with Apple with a well-built, finished product. They hope to market their products to basically everyone that hate's Apple, or that feel the iPad is too expensive.

After all, Intel just makes the CPU and other chipsets. They don't control what it goes into, and how the software is developed for it, and what kind of cheapo plastic they are going to use.
post #11 of 27
Quote:
Originally Posted by BUSHMAN4 View Post

Intel conceding that IPADS are cutting into PC sales is a big concession.
4th Quarter should shed more light on the revenue as the holiday sales are a big event for both APPLE & the PC makers.

Intel did not say ipad
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post #12 of 27
Quote:
Originally Posted by Suddenly Newton View Post

Classy. Ballmer could learn from Otellini.

In all fairness, Intel is more of a partner of Apple than a competitor, unlike MS.
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post #13 of 27
Quote:
Originally Posted by macinthe408 View Post

It's the software, stupid.

It's the Age of the Embedded World with advanced Touch Interfaces, stupid.
post #14 of 27
As an old timer I am enjoying the clout Apple is wielding these days. It wasn't all that long ago that giant, powerful companies like Intel, Microsoft, HP barely acknowledged that Apple even existed let alone expend the effort to support the platform. Apple was ignored, dismissed, pigeonholed. What a difference a decade makes! Now Apple is the subject of board meetings, engineering conferences, and marketing strategies. "How can we make it like Apple makes it? What do we need to do to catch Apple?" Michael Dell is now the one being ignored. Steve Ballmer is the one making sniping comments about everything Apple. Don't you know that Ballmer wants to strangle every journalist who asks his opinion of the iPhone ("rounding error") and the iPad ("sold more than I'd like"). It must really chap his ass! The AppleInsider coven of trolls is more strident, more apoplectic than ever before, a sign of frustration and desperation no doubt.

It's good to be a long time Apple supporter.
post #15 of 27
People forget Intel needs to walk a thin line. Apple is an important client to Intel. Apple uses Intel parts (although not always the processor) in almost all of Apple's products. Further Jobs is friends with Intel's CEO.

Quote:
Originally Posted by adamthompson3232 View Post

this article completely overstates what INTC management's tone was like on the call re: iPad. They did concede slight netbook unit sales declines due to iPad but they were extremely guarded about it and said the impact was minimal from what they could tell. Don't get me wrong, I felt strongly while listening that they were intentionally downplaying the iPad's impact but they definitely were not conceding much netbook loss due to the iPad.
post #16 of 27
Quote:
Originally Posted by lkrupp View Post

[]
Apple was ignored, dismissed, pigeonholed. What a difference a decade makes! Now Apple is the subject of board meetings, engineering conferences, and marketing strategies.
[]

It is funny to read that their conference call had a great deal of questions about Apples iPad a device that didnt exist a year ago, has only been on the market a half year, and was deemed a failure out of the gate for not following in the path of the failures that came before it.

There were two part from a ArsTechnica article I found especially funny
Quote:
Atom sales were down four percent sequentially, and average selling prices (Atom included) were flat; in other words, Atom shipments stalled. Intel took a few different angles on the disappointing Atom sales, one of which was to say that netbooks represent a "mature market" and that Intel expects sales there to slow.

So the netbook market is a mature market? Is that now defined as a stagnant market? The cellphone industry was a mature market, too, then BOOM.

Quote:
But the main argument that Intel, and Otellini in particular, returned to again and again was that cash-strapped consumers are being more parsimonious with their discretionary income, and when they have a choice between a netbook and a tablet, they're picking the tablet.

Havent the anti-Apple crowd been saying that the iPad because people would rather opt for a machine with a full desktop OS and a physical keyboard over some gimmicky device. Especially if price is a factor as we all know that people that buy Apple products have more dollars than cents.

A bit outdated but it relays the point that the iPad has had an effect on netbook sales or that this is the very coincidental.


This graph is from the end of calendar year 2009, therefore it shows the projected sales of 2010. Note the sales for 2009 were 33 million. Isnt Apple already projected to be selling 2-3 million iPads per quarter before the holiday season? That is 24 to 36 million units based on current sales rates for one product from one company. Atom sales may be down 4% but I bet netbook sales are down even farther when you exclude the channel stuffing.
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post #17 of 27
here's what you didn't hear!
If intel brings out a low powered chip for the so-called tablets with a pretty good MS OS to boot. Expect the same sh** as in the pc realm. Tons of tablets sold cheaply. And the MS/intel powered tablet will have to be priced really cheap to compete with the base line ipad. And with so much competition expect the MS style tablets to kill MS powered laptop sells and MS powered pc sells.
Then expect MS to loose tons of money.
Intel is nothing but a virus looking to infect some market with their chips.
And will those MS tablets get trojans and malwar? Cause my ipad is virus free baby. And there ain't no effing Nortons anti virus ad popping up on my ipad baby.
post #18 of 27
Quote:
Originally Posted by lkrupp View Post

As an old timer I am enjoying the clout Apple is wielding these days. It wasn't all that long ago that giant, powerful companies like Intel, Microsoft, HP barely acknowledged that Apple even existed let alone expend the effort to support the platform. Apple was ignored, dismissed, pigeonholed. What a difference a decade makes! Now Apple is the subject of board meetings, engineering conferences, and marketing strategies. "How can we make it like Apple makes it? What do we need to do to catch Apple?" Michael Dell is now the one being ignored. Steve Ballmer is the one making sniping comments about everything Apple. Don't you know that Ballmer wants to strangle every journalist who asks his opinion of the iPhone ("rounding error") and the iPad ("sold more than I'd like"). It must really chap his ass! The AppleInsider coven of trolls is more strident, more apoplectic than ever before, a sign of frustration and desperation no doubt.

It's good to be a long time Apple supporter.

I'm there with you. All the years of crap that Mac users put up with. Since 1990 I had to put up with hearing Apple was a toy for school children or was crap or "everyone uses MS". You were a real outsider and marginalized.

One of largest public libraries in the country, the King County Library System, had (and probably still has) a web page on how to buy a computer. They said that Apples were for school children and artists. Then the "computer guide" went on to tell people how to buy a PC.

At the same time, when I showed people how easy it was to use a Mac and they saw it in action, everyone would say, "I should have bought a Mac." Ha.

With that said, those were different days and Macs did cost more than most people were willing to pay. Apple stuff is just far more better now and is on a credible Unix OS.
post #19 of 27
Quote:
Originally Posted by Suddenly Newton View Post

Classy. Ballmer could learn

Doubtful.
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post #20 of 27
Quote:
Originally Posted by MJ Web View Post

It doesn't take an analyst to see INTC is a growing enterprise. No doubt they'll produce a kickass mobile chip. In the mobile space I see AAPL and INTC at loggerheads but it shouldn't affect their CPU alliance. I know all this because Kathryn Huberty is giving me -- eh, never mind.

Ugh. I've owned INTC for a few years now, and stock is basically exactly where I bought it four years ago. I am getting quite tired of holding on to it.

I am still waiting for the market to see their growth opportunities. Perhaps there aren't much.....
post #21 of 27
Quote:
Originally Posted by anantksundaram View Post

Ugh. I've owned INTC for a few years now, and stock is basically exactly where I bought it four years ago. I am getting quite tired of holding on to it.

I am still waiting for the market to see their growth opportunities. Perhaps there aren't much.....

Maybe their acquisition of Infineon's mobile chip division will lead to something. In the meantime, reinvesting the 3.2% dividend is better than a sharp stick in the eye.
post #22 of 27
Quote:
Originally Posted by sflocal View Post

Not necessarily. They both need to be done equally well and complement each other. Apple hooks both pieces in such an intimate way that I doubt the other players will ever have a product that is truly polished both inside and out.

I think Intel discusses in private that they will never be able to compete with Apple with a well-built, finished product. They hope to market their products to basically everyone that hate's Apple, or that feel the iPad is too expensive.

After all, Intel just makes the CPU and other chipsets. They don't control what it goes into, and how the software is developed for it, and what kind of cheapo plastic they are going to use.

I sort of agree.

Yes, it's hardware and software working together, no doubt. However, Otellini seems to think that if you provide great hardware, everything else will fall into place. He wishes it were that easy.

I thought that maybe Windows Phone 7 might achieve that great symbiotic relationship, but didn't they just announce that 10,000 different phone makers are going to use their software? I just read the review on the new LG running WP7. It has a landscape keyboard running software that doesn't support landscape mode.

Doesn't sound like symbiosis to me.
post #23 of 27
Quote:
Originally Posted by anantksundaram View Post

Ugh. I've owned INTC for a few years now, and stock is basically exactly where I bought it four years ago. I am getting quite tired of holding on to it.

I am still waiting for the market to see their growth opportunities. Perhaps there aren't much.....

INTC has been in slow retreat for the last 10 years... hence the worry about any further erosion to margins.

As someone else mentioned... the dividend... imo it's the only reason to own the stock.
Hmmmmmm...
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Hmmmmmm...
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post #24 of 27
Quote:
Originally Posted by anantksundaram View Post

Ugh. I've owned INTC for a few years now, and stock is basically exactly where I bought it four years ago. I am getting quite tired of holding on to it.

I am still waiting for the market to see their growth opportunities. Perhaps there aren't much.....

Why didn't you sell in April when it was $24.40 like I did?
post #25 of 27
Quote:
Originally Posted by solipsism View Post

In all fairness, Intel is more of a partner of Apple than a competitor, unlike MS.

I don't know. Intel has only been doing business with Apple since they dumped PowerPC. Microsoft has been doing business with Apple going back to the days of the Apple II. But point well taken.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #26 of 27
Quote:
Originally Posted by MJ Web View Post

Why didn't you sell in April when it was $24.40 like I did?

You're either prescient or lucky. I think I know which......
post #27 of 27
Quote:
Originally Posted by Suddenly Newton View Post

Classy. Ballmer could learn from Otellini.

Gold medal for you...
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