Advanced Computing in the Age of AI|Monday, October 19, 2020
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Amid Upbeat Earnings, Intel to Cut 1% of Employees, Add as Many 

For all the sniping two tech old timers take, both IBM and Intel announced surprisingly upbeat earnings this week. IBM CEO Ginny Rometty was all smiles at this week’s World Economic Forum in Davos, Switzerland, after IBM beat Wall Street earnings and revenue estimates.

Intel, meanwhile, last night announced record annual revenue in 2019, $72.0 billion, up 2 percent YoY, while net income held nearly steady, $21 billion last year vs. $21.1 billion in 2018. The results surprised Wall Street, which raised Intel stock from $62.80 per share at the start of trading yesterday to $68.47 as of today’s market close.

Intel also released to us a statement regarding pending employee layoffs, the subject of speculation in recent weeks among media outlets, including this one. Noting that the company has a worldwide workforce of approximately 110,000 and that it’s seeking to fill about 1,300 open positions, Intel said, “As we move into 2020, our business units are focusing their resources on areas where we have the greatest opportunity for growth and, as part of that, some are planning to eliminate roles associated with projects that are no longer priorities. Wherever possible, we’ve transitioned employees or teams within the company to areas of business need, and we expect this to impact less than 1 percent of our global workforce….”

The company added that “impacted employees are from all parts of Intel’s business,” and not confined to the Data Platform Group (formerly called the Data Center Group – DCG), as had previously been reported.

Intel CEO Bob Swan

In its earnings announcement, Intel reported fourth quarter revenue of $20.2 billion, up 8 percent YoY from $18.7 billion, while net income for the quarter rose 33 percent to $6.9 billion. DCG YoY revenues for the quarter jumped 19 percent to $7.2 billion while for the year DCG generated $23.5 billion, up 2 percent over 2018. In total, revenues for Intel data centric products (including DCG, Internet of Things, Mobileye vision-based technology for autonomous vehicles, NSG [memory products] and programmable systems [primarily FPGAs]) jumped 15 percent in Q4 and were up 3 percent for all of 2019.

“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 (earnings per share) 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."

The results exceeded expectations of Wall Street analysts concerned with mounting competitive pressure from chip maker AMD, whose roughly 12-month lead in process technology is eating into Intel’s dominance in the server processor market, along with product supply chain problems impacting Intel’s PC business.

“Intel had a great Q4 in spite of increased competition and supply challenges,” said industry analyst Patrick Moorhead of Moor Insights & Strategy. “The ‘data centric’ businesses carried the day with each business driving double digit growth, except for FPGAs. Even PCs were up, which was a big surprise for me. The biggest things Intel needs to do to keep this going is to get out its next generation 10nm designs out and in-market.”

But Intel signaled that its current pace may abate in the third and fourth quarters of the year due to server processor competition and a cooling off of growth in cloud computing by public hyperscalers and corporations.

“We expect total revenue to be more front-end loaded in the first half than we’ve seen historically,” Intel CFO George Davis during last night’s earnings call.

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