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Nov 20, 2014 3:31 PM

Mobile still a struggle for Intel; PC doing better

The Associated Press

SANTA CLARA, Calif. (AP) Chip-making giant Intel Corp. is still struggling to catch up in mobile computing but says its personal computer business is performing better than expected and its return to revenue growth this year will continue into 2015.

"We were too slow in the past," CEO Brian Krzanich told analysts Thursday at Intel's annual financial conference. "I think this year you'll see things move much quicker."

His comments were echoed throughout the morning by several executives who acknowledged the company's sluggish response to the mobile computing trend. Intel is the world's dominant maker of microprocessor chips that serve as the brains for PCs, but its business has suffered as consumers have increasingly turned to smartphones and tablets that mostly use lower-power chips made by other companies.

While Intel has promised for several years to expand its mobile chip business, it lost more than $1 billion in that segment last quarter, in part because it pays subsidies to device-makers to encourage broader use of its chips.

"I'm not going to tell you I'm proud of losing the kind of money we're losing but I'm also going to tell you I'm not embarrassed by it, like I was a year ago about where we were," Chairman Andrew Bryant said. "This is the price you pay for sitting on the sidelines for a number of years and then fighting your way back into the market."

Krzanich, who took over as CEO in May 2013, did strike an optimistic note on the global PC business. He said the decline in PC sales appears to have leveled out, based on the company's own projections and recent reports from independent market research firms. Intel's own PC business is on track to grow by 5 percent this year, then dip just slightly again next year, according to Chief Financial Officer Stacy Smith. The company expects to sell more chips for data center computers and other devices, such as wearables and a wide range of "smart" appliances.

After two years of overall sales declines, the company is forecasting annual revenue to grow 6 percent to roughly $55.8 billion this year.

"We're growing again and we expect to grow again next year," Smith added, saying he expects a revenue increase in the "mid-single digits" in 2015. The upbeat revenue forecast helped lift shares over 4 percent to a 52-week high of $35.82 on Thursday afternoon on heavier-than-normal trading volume. The stock has been on a run-up since May.

Intel will likely meet its goal of supplying chips for at least 40 million tablets this year but expects to post a loss for the business. Those losses will shrink next year but mobile won't be profitable until after 2016, Smith said.

Intel recently announced plans to merge its PC and mobile chip segments into a single division, saying the lines are blurring between tablets and PCs. Some analysts have questioned whether the move is aimed at making it harder to track Intel's losses on mobile chips. A spokeswoman said the company hasn't decided how it will report the division's financial performance.

The company also said that it will boost its annual dividend by 6 cents to 96 cents.


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