Despite of softening demands towards personal computers in the second half of 2011 on some markets, Intel Corp., the world's largest maker of microprocessors, managed to set another revenue record of $54 billion last year and also set a new profit record. Analysts believe that the results were primarily driven by rapid growth in sales of mobile and server chips as well as strong demand in various Asian countries.
Intel Celebrates Record Year
Intel's revenue of $54.0 billion was up 24% from a year ago and its second year in a row with its business growing greater than 20%. Intel PC client group grew 17% from a year ago on continued strength in emerging markets as rising incomes increased the affordability of personal computers and on strength from the enterprise market segment. The server market segment was particularly strong with its data center group growing 17% year over year, as the explosion of devices that compute and connect to the internet drove the build out of the cloud infrastructure.
Gross margin for the year was 62.5%, at the top end of Intel's historical gross margin range for the 2nd year in a row. Spending as a percent of revenue was approximately flat to 2010 at 29.7%. Operating profit of $17.5B was 32.4% of revenue, and up 12% year over year. Net income was $12.9 billion with earnings per share growing to $2.39, up 19% from a year ago. On a Non-GAAP basis, after excluding acquisition related impacts, earnings per share grew 25% from a year ago.
Intel Architecture group 2011 revenue of $50.5 billion was up 20% year over year:
- The PC client group had revenue of $35.4 billion, up 17% year over year.
- The data center group had revenue of $10.1 billion, up 17% from 2010.
- The other Intel architecture group had revenue of $5.0 billion, up 64% year over year. Intel Mobile Communications (IMC), formerly the Infineon wireless division, contributed $2.1 billion to 2011 revenue.
- Intel Atom micro-architecture revenue, including microprocessors and associated chipsets, was $1.2billion, down 25% from 2010, with netbook volume down significantly offset partially by other Intel Atom micro-architecture based businesses.
The software and services group 2011 revenue of $1.9B was up 608% year over year. The acquisition of McAfee, Inc. contributed $1.5B to 2011 revenue.
“2011 was an exceptional year for Intel. With outstanding execution the company performed superbly, growing revenue by more than $10 billion and eclipsing all annual revenue and earnings records. With a tremendous product and technology pipeline for 2012, we’re excited about the global growth opportunities presented by Ultrabook systems, the data center, security and the introduction of Intel-powered smartphones and tablets,” said Paul Otellini, president and chief executive officer at Intel.
Fourth Quarter Results Lightly Impacted by HDD Shortage
Intel's fourth quarter revenue of $13.9 billion was up 21% year over year. Revenue in the fourth quarter was negatively impacted by the floods in Thailand and the resulting hard disk drive supply shortages. As a result of the HDD shortages Intel saw a reduction of orders for microprocessors as customers reduced inventories across the supply chain. Despite this reduction in inventory levels, it is its belief that the shortage did not impact actual sales of personal computers in the fourth quarter with demand trends playing out as expected.
"Despite HDD shortages caused by the floods in Thailand, Intel was able to generate strong notebook and server sales. On the PC Client side, sales grew 17.3% year-to-year, benefitted by continued demand for Core i-series 'Sandy Bridge'. Intel’s Core branded CPU’s now account for 70% of PC unit shipments, which helped drive up ASPs and support a 110 basis point sequential increase in overall gross margin performance to 64.5% for the quarter," said Beau Skonieczny, an analyst with Technology Business Research.
Gross margin improved to 64.5% from the third quarter with lower factory start up costs as Intel ramped production and qualified for sale its next generation product Ivy Bridge, its first product on 22nm process technology, and lower unit costs. Operating income of $4.6 billion was 33% of revenue and up 14% from a year ago. Net income of $3.4 billion and earnings per share of $0.64 were up 6% and 14% respectively from a year ago. On a Non-GAAP basis earnings per share grew 21% from a year ago.
I"ntel continued to generate growth on a year-to-year basis across all major geographies, led by APAC, which grew 23.1%. The rapidly expanding consumer market in China is helping to fuel continued PC demand, as household incomes improved and discretionary PC spending accelerated. Other emerging markets that also contributed to revenue expansion were India and Indonesia. Consequently, Intel’s total revenue grew 21.2% year-to-year," added Mr. Skonieczny.