RSSIntel earns 45% more in 2007 than in 2006
By Scott M. Fulton, III | Published January 15, 2008, 7:16 PM
It was by any measure a stellar year for the world's leading microprocessor manufacturer, but what's disappointing investors this quarter is the disheartening news that 2007 is over.
It doesn't take much to disappoint Wall Street, and in recent days, investors are looking any excuse to justify a selloff that was probably well overdue anyway. But Intel has fully recovered from its last wave of restructuring, and shows no signs of future trouble. What it does show is some reduced growth -- not a pothole ahead, but not smooth sailing, either.
While revenue for the last quarter of 2007 was up over the third quarter by 6%, to $10.7 billion, that didn't reflect the "seasonality" that used to typify the revenue pattern of a major player in the PC industry. With the home PC trending toward a commodity product last year, it wasn't the big ticket item this last Christmas, and that showed in Intel's numbers.
However, with restructuring behind it, the company could keep a bigger chunk of that revenue to itself: $2.3 billion of net income, up 51% over the same quarter last year.
The year 2007 was all about "payback time" for Intel. While its annual revenue only climbed a modest 8% to $38.3 billion for the year, net income was up a delightful 38% to $7 billion, and earnings per share climbed 37% to $1.18. The reasons are pretty much obvious now: Intel regained a lot of what it had lost to AMD in all critical market segments, including and especially in server CPUs.
So what's the problem? First, it's the fact that this quarter's numbers came in on the low side of guidance, which means that three months ago analysts were told to expect a ballpark range, and when you divide that range in half, today's figures were within the lower half.
Next comes the guidance for Q1 2008, which calls for less than $10 billion of revenue and a gross margin getting nicked to 56%. For the full year 2008, the company's financial officers are only expecting 57% gross margin, which suggests that its fourth quarter 2008 won't necessarily be any better -- if it actually had to be -- than the fourth quarter of 2007.
Still, with startup costs for 45 nm production coming in less than anticipated, the road for Intel's market share comeback still looks unencumbered for now.
This of course is almost entirely attributed to the 40% Mac sales increase in 2007. A wise man once said, "Don't hate the playa, hate the game." (^__^)
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|Keep dreaming. I think Mac market share was around 10% last year, so a 40% increase would still only put them at 14% market share. Although Apple charges the suckers an exorbitant premium on the Macs, their 4% market share jump would hardly account for a 40% increase in Intel's earnings. Try harder next time.
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|I think Mac market share was around 10% last year, so a 40% increase would still only put them at 14% market share.
Your math is incorrect. A 40% increase in sales does not mean any specific increase in market share, as the overall size of the market has increased as well.
Your point, however, is correct. Intel's tremendous growth is due far more to it [re]gaining market share from AMD than to Apple's transition to Intel CPUs.
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|I agree with you DK. I think Intel swooped in and picked up many, many AMD builders. I for one had been AMD since the K62 and I just switched to Intel last year in October when I purchased my quad core. I'm guessing that there are others like me who saw a price/performance/value step in buying the intel part over the AMD. For me, I purchased the Q6600 for 265, which is only a bit more than AMD's offerings which are slower and less OCable.
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|"Apple charges the suckers an exorbitant premium on the Macs"
Nonsense.
Find another dual quad core Xeon for $2800.
And the iMac, MacBook and MacBook Pro are priced very competitively. Not to mention their ability to run a quality UNIX desktop.
(And while they have persisted in trying to use OSX as a strategic marketing advantage for their hardware, I also wish they would release OSX for the general market, even in an unsupported form. And their machines can stand on their own just fine.)
Its time for you (and the others who claim not to care about Apple but obsessively troll every Apple post) to look at the broader market and drop the tired MS vs Apple rant.
Its even more tired now than it was 15 years ago. It would be nice if perpetual adolescence wasn't such a viral disorder.
They make good machines that are elegantly designed. As do others...
Is every model aimed at every person? No. And the notion that their machine pricing is out of line, just as their 'incompatibility' due to their early adoption of that left field technology called TCP/IP, went out 10 years ago. Deal with it fanboy.
Your knee-jerk anti-Apple has long since become old.
Intel's capturing the Apple account has certainly helped Intel.
But is that the sole responsible cause for Intel's increase in profits? Certainly not, as Core's performance, and the initial BIOS issues with AMD's quad core have also benefited Intel.
I just hope that AMD can resolve the issues with their Quad core quickly as their memory management schema is superior to Intel's.
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|Every single AMD box I ever had to use was inferior to Intel products. Even while the hype was at its peak I could sadly not see any supposed advantage. It just always seemed a you get what you pay for situation...
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|Pentium 4 was horrible processor, nowhere near Athlon 64. Both slower and more power hungry (noisy fans). But Core 2 Duo is great. If only AMD didn't sit on their a** all these years they had superior product, they would have a competitive answer right now.
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|The numbers spoke and Intel processors were poop pre-core duo. There wasnt a benchmark that an Intel could beat an AMD processor on UNLESS the Intel part was costing 800+ dollars, in which case making it not worth it for many. Core Duo was the turning point...not only were they genuinely faster than their AMD counterparts, but they were highly ocable for the most part and enjoyed a price point advantage because of that.
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|Yeah, whatever. People accuse Microsoft of monopolizing the OS market, but Apple has a monopoly of the Mac hardware as well. While buying a complete PC means you probably get Windows already installed on it, at least you have the option of buying your PC from any number of hardware manufacturers. This in turn creates competition and lower prices, something that will never happen to the Mac. The only company that manufactures Macs is Apple. And yes, they do charge an "exorbitant premium" on their hardware. Just look at any of the iSuppli manufacturing cost breakdowns of any Apple product. They usually charge a good 80-95% premium. More than ANY OTHER COMPANY.
"Find another dual quad core Xeon for $2800."
I find it amusing that you try to argue the Mac is priced competitively (*laugh*) and then use a high end, server machine as your example, which is clearly NOT aimed at the average person without deep pockets.
"And the iMac, MacBook and MacBook Pro are priced very competitively. Not to mention their ability to run a quality UNIX desktop."
Hilarious. Because a PC that uses the EXACT SAME PROCESSOR cannot run a "quality UNIX desktop" right? Good one, Sherlock. Oh and that brings us to the oxymoron of the day: quality UNIX desktop. You keep saying the iMacs and AppleBooks are priced competitively. Compared to what? Just because you repeat the same thing over and over, it doesn't magically become true. Everyone already knows you pay a bunch extra for Apple products because they look pretty.
It is time for you and the other retarded Apple zealots to shut the hell up. Apple was irrelevant 15 years ago and it will still be irrelevant 15 years from now. You can spew your lame insults all day, it won't change the fact that Apple has a lock down on their hardware, just so they can reap enormous profits. Thus, they will never proliferate the market to any great degree. End of story.
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|"Thus, they will never proliferate the market to any great degree. End of story."
That one is going to haunt you.
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|Probably need to let someone else setup your machines for you then. AMD processors have been cooler and better than Intel for a long time - until Core2. Unfortunately now we're faced with a very real threat to AMD in the medium term. If they cannot find a way to launch a performance-competitive processor in the next 2-3 years, they may dwindle and vanish from the desktop market completely.
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