Intel's Mobile Device Capitulation


  • For 2015, Intel posted stagnant revenue and a decline in operating income.
  • The Client Computing Group continues to be weighed down by mobile device losses.
  • The mobile losses are all the more unacceptable since Intel appears to be giving up on smartphones.

In his prepared remarks for the 2015 Q4 earnings conference call, Intel's (NASDAQ:INTC) CEO Bryan Krzanich claimed a "strong finish" to the year. But gone was last year's bravado regarding the mobile space. Gone was any mention of tablet processor sales, SoFIA, Intel's partnerships with Rockchip and Spreadtrum, or even Intel's wireless modems. Intel's capitulation on mobile sounds a warning for investors regarding Intel's fundamental business model.

Source: Intel

Focusing on Its Presumed Strengths

As previewed at Intel's Investor Meeting last November, Intel's management is focused (and would like to focus investor attention) on three key areas of growth, the data center, the Internet of Things (IOT), and non-volatile memory. On the surface, this seems sensible, because Intel has high hopes for 3D Xpoint memory, and the Data Center Group (DCG) and IoT Group (ITG) both posted revenue gains for Q4. Intel eked out a slight revenue gain for the quarter of 1.3% y/y to $14.9 billion.

However, even the bastions of DCG and ITG showed signs of strain. While revenue was up for the quarter, operating income was down for both. Total operating income for Intel was down 3.5% y/y for the quarter. For the year, revenue declined by 1% y/y to $55.3 billion while operating income declined by 7.8% y/y to $14 billion.

Client Computing Group (CCG) faced with the ongoing decline in worldwide PC sales, continued its relentless decline. For Q4 revenue was down by about 1% while operating income was down by 4% y/y. These year-over-year comparisons are for restated revenue and operating income assuming the combination of the PC Client Group and the Mobile and Communications Group (MCG).

That combination of the PCCG and MCG at the beginning of the year continues to obscure, but not completely conceal Intel's continuing mobile losses, which were once again acknowledged

This article was written by

Mark Hibben profile picture
Balanced, expert investing strategies from a technologist's perspective
Mark has a masters in Electrical Engineering from USC, is an independent iOS developer, and blogs about technology trends and companies, the focus of his investments.

Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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