Where's the Ryzen Effect? Intel posts Record Financials

[btarunr]

Intel Corporation today reported fourth-quarter and full-year 2019 financial results. The company also announced that its board of directors approved a five percent cash dividend increase to $1.32 per share on an annual basis. The board declared a quarterly dividend of $0.33 per share on the company's common stock, which will be payable on March 1 to shareholders of record on February 7.

"In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data," said Bob Swan, Intel CEO. "One year into our long-term financial plan, we have outperformed our revenue and EPS expectations. Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns."



Intel's collection of data-centric businesses achieved record revenue in the fourth quarter, led by record Data Center Group (DCG) revenue. DCG revenue grew 19 percent YoY in the fourth quarter, driven by robust demand from cloud service provider customers and a continued strong mix of high-performance 2nd-Generation Intel Xeon Scalable processors. Intel acquired Habana Labs in the fourth quarter, strengthening its artificial intelligence portfolio for the data center. Internet of Things Group (IOTG) revenue was up 13 percent on strength in retail and transportation. Mobileye achieved record revenue, up 31 percent YoY on increasing ADAS adoption. Intel's memory business (NSG) was up 10 percent YoY on continued NAND and Intel Optane bit growth. PSG fourth-quarter revenue was down 17 percent YoY.

In the fourth quarter, the PC-centric business (CCG) was up 2 percent on higher modem sales and desktop platform volumes. Major PC manufacturers have introduced 44 systems featuring the new, 10 nm-based 10th Gen Intel Core processors (previously referred to as "Ice Lake"), and momentum continues to build for Project Athena. Project Athena-verified devices have been tuned, tested and verified to deliver fantastic system-level innovation and benefits spanning battery life, consistent responsiveness, instant wake, application compatibility and more. Intel has verified 26 Project Athena designs to date.

View at TechPowerUp Main Site

 

[dicktracy]

Brilliant. It’s a slaughter once they get post Skylake CPUs out to the market.

 

[R-T-B]

Brilliant. It’s a slaughter once they get post Skylake CPUs out to the market.

Do you want a monopoly or something? Comments like this are so confusing.

 

[R0H1T]

Baity title, Intel's margins are down - they don't break it for each (sub) segment I believe - so you won't see the Ryzen (DIY) effect just from a cursory glance. Secondly, the R&D plus CAPEX will go up, unless Intel wants to stick to 14nm for the foreseeable future. Lastly layoffs, when was the last time a company experiencing record profits did this
Intel’s pending layoffs will hit multiple business groups, Oregon workers

Did I mention notebooks, would be quite the spectacle when AMD goes full throttle with zen2 APU

 

[londiste]

News & Events

www.intc.com

They do break the results down to business units and PCG results are quite noticeably down

 

[dinmaster]

Intel has it's hands in so much it would take more then just desktop and server cpu's. Apu's will hit it a little more but again, it will take a lot to move them. Revord amounts, The shortage jacking prices up as a start....

 

[R0H1T]

News & Events

www.intc.com

They do break the results down to business units and PCG results are quite noticeably down

They don't break it down to channels, do they? Like Retail, OEM, enterprise et al. The biggest slump will be in Retail & the biggest margin erosion likely in enterprise (server) space.

 

[john_]

Well, Intel is still selling as many CPUs as it can produce, so there is logic behind those numbers. Especially when lattest news/rumors suggest that there will be a shortage of Intel CPUs for the whole 2020.

As for AMD the question is if they can make as many CPUs as they want, or if there isn't such demand as everyone was expecting. It makes me wonder if those super high performing EPYC CPUs that cost a third compared to a equivalent dual CPU setup of top Xeon CPUs where enough to get more market share in the server market. Maybe AMD is giving those away, for prices that look like a steal, because it sees that big corporations and IT managers still prefer to pay extra for insecure, old tech CPUs from the top player, than top performing, modern, secure and much cheaper CPUs from the second player.

I guess we will find out soon. Of course we could see what most are saying. That the PC/X86 market is growing rapidly and all three major companies in my minds, Intel, Nvidia and AMD, will report record revenue.

 

[Dragonsmonk]

Baity title, Intel's margins are down - they don't break it for each (sub) segment I believe - so you won't see the Ryzen (DIY) effect just from a cursory glance. Secondly, the R&D plus CAPEX will go up, unless Intel wants to stick to 14nm for the foreseeable future. Lastly layoffs, when was the last time a company experiencing record profits did this
Intel’s pending layoffs will hit multiple business groups, Oregon workers

Did I mention notebooks, would be quite the spectacle when AMD goes full throttle with zen2 APU

Indeed, 1.3B less income and just a little more than 3000 employees less (2018 vs 2019)!
How is that a "record"?

 

[notb]

Indeed, 1.3B less income

1.3B less income where?

and just a little more than 3000 employees less (2018 vs 2019)!

Source?
From what I've found, they're actually up from 2018 (+2%).
Not that it matters. 2% workforce fluctuation is nothing special.

They don't break it down to channels, do they? Like Retail, OEM, enterprise et al. The biggest slump will be in Retail & the biggest margin erosion likely in enterprise (server) space.

You say then don't break it down, but you seem very confident about your ideas. Source?

Well, Intel is still selling as many CPUs as it can produce, so there is logic behind those numbers.

Intel sells as much as it can. And they're increasing production capacity. And they're keeping the very high margins.
It's not exactly my definition of "being in trouble".

or if there isn't such demand as everyone was expecting

Not everyone.

I guess we will find out soon. Of course we could see what most are saying. That the PC/X86 market is growing rapidly and all three major companies in my minds, Intel, Nvidia and AMD, will report record revenue.

Exactly. AMD will likely show what is expected: +50% revenue Y/Y. Margins is another story completely.

As you said: market is growing. All companies sell more. Obviously, AMD is starting from a position that can give them absurdly high growth.

But while AMD's expansion is expected (and in their stock price...), Intel's results should have been more flat. It's a bit shocking...

 

[Valantar]

News & Events

www.intc.com

They do break the results down to business units and PCG results are quite noticeably down

From a quick Google search "Intel PSG" (can't find "PCG" anywhere?) seems to indicate their Programmable Logic division, i.e. FPGAs. The notes in your link seem to indicate that various PC segments are indeed not separated, but bundled into the "PC-centric CCG" heading, which is 2% up q-over-q and flat YoY. Still, with notable increases in pretty much everything else that does tell us something - Intel historically has held off dropping PC sales by boosting margins and ASPs, but this time they're just breaking even.

 

[notb]

From a quick Google search "Intel PSG" (can't find "PCG" anywhere?) seems to indicate their Programmable Logic division, i.e. FPGAs. The notes in your link seem to indicate that various PC segments are indeed not separated, but bundled into the "PC-centric CCG" heading, which is 2% up q-over-q and flat YoY. Still, with notable increases in pretty much everything else that does tell us something - Intel historically has held off dropping PC sales by boosting margins and ASPs, but this time they're just breaking even.

But on the other hand: the price drop in desktop CPUs is visible. The fact that they've managed to keep a stable revenue in this segment is an achievement.
One probable factor: they're killing the low-end models (Pentiums, entry i3), which used to compete with cheap pre-Ryzen stuff from AMD.

 

[londiste]

Thank you for correcting me. It was too early in the morning I suppose :/

I suppose we can see some trends out of that statement down on the page under - SUPPLEMENTAL PLATFORM REVENUE INFORMATION.
Comparing the volumes and average prices gives us a few hints on what is going on.

 

[tvamos]

Baity title

Title when originally posted was just "intel reported q4 and 2019 fin. results". This ryzen addition wasn't necessary.

 

[Valantar]

But on the other hand: the price drop in desktop CPUs is visible. The fact that they've managed to keep a stable revenue in this segment is an achievement.
One probable factor: they're killing the low-end models (Pentiums, entry i3), which used to compete with cheap pre-Ryzen stuff from AMD.

Absolutely - the effective discontinuation of anything remotely modern below a Core i3 (and even those have very tight supplies) has obviously driven ASPs up by quite a lot. Still, one has to question how long this seeming stability can be maintained - at some point something will have to give. Either OEMs wanting more flexibility for scalable designs (low-end to upper midrange in the same design, for example) will start moving to Ryzen, 10nm will start arriving properly and relegating 14nm to low-end chips and/or high clockspeed ones (potentially boosting sales but dropping ASPs and margins due to increased costs on 10nm), or consumers might tire of the seemingly never-ending series of rehashed 14nm Skylake parts. Not that they haven't made impressive improvements since 2015 (compare a 9900K to a 6700K ...), but the need for something new is rather dire. The rumored price cuts for the next 14nm desktop series is also likely to have a significant impact (current cuts to HEDT CPUs don't matter much in total revenue). I wouldn't be surprised if we see actual negative numbers in this segment next year.

 

[laszlo]

these figures depend on how much you declare as expenses...

 

[T1beriu]

Where's the Ryzen Effect?

You have to look deep in Intel's financials to see that AMD put a dent in their number.

Intel is down in volume YoY -6% in desktops, -5% in notebooks and -3% in servers. You can find the info in SUPPLEMENTAL PLATFORM REVENUE INFORMATION.

 

[notb]

these figures depend on how much you declare as expenses...

This is an formal financial statement from a major listed company. It's audited by many authorities. Figures are solid and checked down to a single USD.

You have to look deep in Intel's financials to see that AMD put a dent in their number.

It's not a dent if they've managed to mitigate that with higher prices.
If anything, it's even better...

It was a very good year for Intel. End of story.
Numbers don't lie, but anti-Intel crowd will be nitpicking like they usually do. And of course they're allowed to do so.

 

[LabRat 891]

Love them or hate them for it, Intel has always been masterful at assembling selections of real data in ways that look better than relevant data would suggest. (Comparing mobile to desktop between generations and brands, etc.) It's 'Good Marketing'

I don't believe the title is misleading since I bet that's how their press release reads as well. Also, as seen, it triggers fanboys and grabs investors' attention on both sides.

 

[$ReaPeR$]

Baity title, Intel's margins are down - they don't break it for each (sub) segment I believe - so you won't see the Ryzen (DIY) effect just from a cursory glance. Secondly, the R&D plus CAPEX will go up, unless Intel wants to stick to 14nm for the foreseeable future. Lastly layoffs, when was the last time a company experiencing record profits did this
Intel’s pending layoffs will hit multiple business groups, Oregon workers

Did I mention notebooks, would be quite the spectacle when AMD goes full throttle with zen2 APU

thank you for clarifying things.

 

[notb]

Love them or hate them for it, Intel has always been masterful at assembling selections of real data in ways that look better than relevant data would suggest. (Comparing mobile to desktop between generations and brands, etc.) It's 'Good Marketing'

This is a financial statement. There's very little flexibility in how these figures can be calculated.

 

[bug]

You have to look deep in Intel's financials to see that AMD put a dent in their number.

Intel is down in volume YoY -6% in desktops, -5% in notebooks and -3% in servers. You can find the info in SUPPLEMENTAL PLATFORM REVENUE INFORMATION.

When you can make the same amount of $$$ selling less, that's the opposite of a "dent"

This is what I have said before: being 10x larger than your opponent gives you the ability to take punishment. Intel didn't crumble in the days of AthlonXP/64, they won't crumble because of Zen.

 

[laszlo]

This is an formal financial statement from a major listed company. It's audited by many authorities. Figures are solid and checked down to a single USD.

of course figures add-up; however intel as a company who own fabs and having ~110 K employees can decide to decrease costs anytime just to keep investors happy

this decrease will compensate the loss so by magic they can report record financials

how can they do it, may you ask; easy, cut down employees bonuses as they wish without affecting wages is the most common one f.ex. the more employees you have the more you save

 

[64K]

People who are thinking that Intel is being hurt much by Ryzen should take a look at how most PCs are sold. Take a look around Dell's online store and you will see that by far the majority of desktops and laptops for work or for home use have Intel CPUs. A few have the AMD alternative though.

Their servers you can choose between Intel or Intel.

I have seen estimates that AMD has doubled their market share in the server market but their market share is still extremely low.

Will AMD or Intel Gain Mobile and Server Market Share?

AMD stock is popular among investors, as is evident from its 180% increase since January 2018. Investors are betting on its market share gain from Intel.

articles2.marketrealist.com

Basically, until the big PC manufacturers start pushing more AMD CPUs in their business and home PCs and servers then AMD will only make modest gains in market share and Intel will remain the colossus in the CPU market.

 

[notb]

of course figures add-up; however intel as a company who own fabs and having ~110 K employees can decide to decrease costs anytime just to keep investors happy

this decrease will compensate the loss so by magic they can report record financials

how can they do it, may you ask; easy, cut down employees bonuses as they wish without affecting wages is the most common one f.ex. the more employees you have the more you save

But now you're talking about real cost cutting, so I'm a bit lost. Of course companies are trying to control costs. That's how they can make a profit...

I thought your earlier post suggested they're reporting understated costs, i.e. they're artificially increasing their margins.
It's fairly easy to hide income (report lower net profit) and most companies do that, but it's very difficult to hide costs.

It's even harder for Intel, who does almost everything in-house.