As it misses earnings target, Intel talks up PC sales

Its moneymaker PC and server chip sales struggled, and its new mobile and wearable chips will be less lucrative

Intel sees signs of a comeback for the PC market, with the company saying that fourth-quarter PC sales were higher in 2013 than in the prior year. That bit of optimism came as Intel reported moderate gains in its own revenue and profits for the just-completed fourth quarter of 2013.

Still, the results reported by Intel today fell just short of the earnings Wall Street analysts were hoping for.

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Intel's net income for its 2013 fourth-quarter was $2.6 billion, up from $2.5 billion in the year-ago quarter. Revenue rose 3 percent to $13.8 billion during the fourth quarter. Intel reported earnings of 51 cents per share, up 6 percent from 2012's fourth-quarter earnings, but lower than the 52 cents a share analysts polled by Yahoo Finance were expecting. Intel's revenue beat analyst projections of $13.72 billion.

"We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago," said Intel chief executive Brian Krzanich in a statement. "We've built a strong foundation for our business by bringing innovation to the market more quickly across a wide range of computing platforms." As an example, Krzanich cited last week's CES keynote where the company demonstrated wearable tech powered by its products as well as Intel's RealSense 3D camera. But such chips are make much less money per unit than PC and server chips do.

So far, Intel has banked on its "Haswell" Core processor as the foundation of its PC platform. Intel said in October that it now expects the next-generation chip, Broadwell, to be released in the second half of 2014.

But Intel's PC fortunes have suffered as the PC itself has struggled. Intel said that revenue in the PC Client Group was flat year over year at $8.6 billion, and average prices fell. Surprisingly, average desktop prices climbed 5 percent, while notebook prices dropped 7 percent. For the year, PC client revenues fell 4 percent to $33 billion.

Intel said in a statement that the company "saw the market stabilize in the back half of the year," with PC sales higher in the fourth quarter than a year ago. With tablets factored in, combined PC and tablet sales were up to 10 percent. That squares with what market research firms have been saying, as both Gartner and IDC have reported some positive signs in their fourth-quarter PC sales overviews.

Instead, Intel's data center business picked up the slack. During the fourth quarter, Intel's Data Center Group reported $3.0 billion in revenue, up 8 percent from the year ago. For all of 2013, revenues rose 7 percent to $11.2 billion.

Intel's "other" businesses reported 9 percent year-over-year growth, to $1.1 billion, or $4.1 billion for the year.

Intel predicted that revenues would fall by about 7 percent in 2014's first quarter to $12.8 billion.

This story, "As it misses earnings target, Intel talks up PC sales" was originally published by PCWorld.