Intel Atom Sales Collapse as Shipments of Other Intel Chips Soar

Intel Reports Record Financial Results for Fifth Quarter in Row

by Anton Shilov
07/21/2011 | 06:42 PM

Intel Corp. this week reported its fifth consequitive quarter of record revenue in a row with sales reaching about $13 billion. But as the company's financial results improve alongside with shipments of its microprocessors for desktops, laptops and servers, sales of Atom chips designed for netbooks continue to decline.


On a non-GAAP basis, Intel's revenue was $13.1 billion, operating income was $4.2 billion, net income was $3.2 billion, and EPS was $0.59.  On a GAAP basis, the company reported second-quarter revenue of $13.0 billion, operating income of $3.9 billion, net income of $3.0 billion, and EPS of $0.54. The company generated approximately $4.0 billion in cash from operations, paid cash dividends of $961 million, and used $2.0 billion to repurchase 93 million shares of common stock.

Intel's PC client group, which sells processors for desktops and notebooks, revenue were up 11% year-over-year (YoY) in Q2 of FY2011. According to Intel, around 66% of the PC client microprocessor product mix are Core i-series microprocessors, including the latest Sandy Bridge chips.

"At this point in the year, we believe the PC unit growth will be around 8% - 10%, down a bit from our earlier view, but above that in revenue as enterprise PC purchases continue to drive a very rich mix," said Paul Otellini, chief executive officer of Intel, during a conference call with financial analysts.

The data center group's earnings were up 15% year-over-year as sales of microprocessors like Intel Xeon, Intel Itanium and supporting logic continue to increase. In particular, Intel claims that the demand for the latest ten-core Xeon "Westmere-EX" chips launched in April is "healthy". Microprocessor unit shipments for storage applications set a record and were up 38% from a year ago. The cloud segment was up 50% in 1H 2011 vs. the 1H 2010, Intel said. Sales of DCG topped $2 billion mark, according to Intel.

Other Intel architecture group revenue was up 84% year-over-year, including embedded & communications group revenue up 25% year-over-year. Intel shipped over one million units of Atom processors into embedded applications (including medical imaging, print imaging, communications and industrial applications), which is an increase of 76% YoY. NAND business was also up 15% annually.

What is noteworthy is that Intel Atom microprocessor and chipset revenue of $352 million was down 15% year-over-year. Even despite of record shipments into the embedded segment and beginning of shipments into ultra-mobile tablet segment, sales of Atom platform were down. Naturally, this means that shipments of netbooks are beginning to decrease as the devices lose their appeal for consumers because slates are gaining acceptance.