Intel Q2 Financials- revenue down, profit down, datacenter up

[pablo87]

Units were down 22% on DT and 12% on notebooks, completely explains Altera, gotta fill those Fabs or Samsung and/or TSMC will go right by them.

Desktop is a self fulfilling prophecy though it confirms what Bethune said - you can make a pizza so cheap nobody wants to eat it.

 

[AtenRa]

Client Computing Group Notebook, Desktop and Tablet Platform Key Drivers


- Notebook platform volumes decreased 11% from Q2 2014 to Q2 2015
- Notebook platform average selling prices decreased 2% from Q2 2014 to Q2 2015
- Desktop platform volumes decreased 22% from Q2 2014 to Q2 2015
- Desktop platform average selling prices increased 6% from Q2 2014 to Q2 2015
- Tablet platform volumes increased 11% from Q2 2014 to Q2 2015, up to 10 million units
- Notebook platform volumes decreased 4% from the first six months of 2014 to the first six months of 2015
- Notebook platform average selling prices decreased 2% from the first six months of 2014 to the first six months of 2015
- Desktop platform volumes decreased 19% from the first six months of 2014 to the first six months of 2015
- Desktop platform average selling prices increased 4% from the first six months of 2014 to the first six months of 2015
- Tablet platform volumes increased 23% from the first six months of 2014 to the first six months of 2015, up to 17 million
units


Lets see what happens in Q3 2015 after Win 10.

 

[VirtualLarry]

- Desktop platform volumes decreased 22% from Q2 2014 to Q2 2015
- Desktop platform volumes decreased 19% from the first six months of 2014 to the first six months of 2015

Well, what do they expect, when each new pair of generations of CPUs only gives us a 5-8% increase in overall performance? Why would any desktop user upgrade, unless their PC is 10 years old, or failing?

Desktop is dead, but that's because desktop market == performance, and Intel hasn't been innovating in that dept for a long time, at least in terms of absolute per-core performance. (It's much easier to push process tech innovations, it seems, and simply go the "moar cores" route for server CPUs.)

 

[AtenRa]

Well up until 2009 when i got my Core i9 920, I was upgrading my CPU every year. Then it was no longer necessary and i upgraded to Core i7 3770K in 2012. Not because the performance of the Core i7 920 @ 4GHz was not enough, but because of the new platform. Now i dont plan to upgrade until perhaps next year and again not because of the lack of CPU performance from my 4.44GHz Core i7 but for a new platform.

Im expecting Win 10 and DX-12 to worsen the CPU upgrades further. Perhaps we will see a boost to GPU upgrades if PC Games IQ performance needs are increased and secondly due to higher 1440p and 4K Monitor sales.

 

[Systems analyst]

2015 Q2 tax rate: 9.3% : EPS 55 cents.
2014 Q2 tax rate: 28.7% : EPS 55 cents.
That tax rate is very low, and if not sustained, then EPS will fall dramatically in future quarters.

Also:

April 2014, they reported $2 .8 billion earnings for 2014 Q1 PC group.
April 2015, they reported $1 .4 billion earnings in the combined PC + mobile group for 2015 Q1.
- This is a shortfall of $1 .4 billion earnings in a quarter.

July 2014, they reported $3.7 billion earnings for 2014 Q2 PC group.
July 2015, they reported $1 .6 billion earnings in the combined PC + mobile group for 2015 Q2.
- This is a shortfall of $2.1 billion earnings in a quarter.

More quarters will reveal a trend, if there is one.

 

[VirtualLarry]

More quarters will reveal a trend, if there is one.

Maybe Intel's just not "hip" anymore, with the younger crowd. They only seem to know Apple and Samsung (phones, tablets), and think of Intel like they think of Buick - what their parent drove / used, back in the "olden days".

 

[Fjodor2001]

Intel's (INTC) CEO Brian Krzanich on Q2 2015 Results - Earnings Call Transcript:

http://seekingalpha.com/article/332...h-on-q2-2015-results-earnings-call-transcript

 

[cytg111]

Desktop is dead, dead, dead.

Not as long as there is a server demand I would think.

-As long as there is a server demand, there is a demand for fat fast cores.
-Server->workstation->desktop is a cost/benefit that even in a declining desktop market still makes too much sense.
-As long as there is faster desktops than comparable mobile devices, there will be software that differentiates them
Sure the eco system is changing but proclaiming death to one segment is premature and well, the dominos must then fall.
Intel is trying to stretch core from fat server to ultra portable tablets. Stretching a bit thin perhaps.

 

[ShintaiDK]

Not as long as there is a server demand I would think.

-As long as there is a server demand, there is a demand for fat fast cores.
-Server->workstation->desktop is a cost/benefit that even in a declining desktop market still makes too much sense.
-As long as there is faster desktops than comparable mobile devices, there will be software that differentiates them
Sure the eco system is changing but proclaiming death to one segment is premature and well, the dominos must then fall.
Intel is trying to stretch core from fat server to ultra portable tablets. Stretching a bit thin perhaps.

When we say dead, its the relevance factor. Workstation class CPUs etc will still be there. There will still be some mobile moved to desktop.

But desktop as a segment is becoming completely "irrelevant" very fast. dGPU shipments also state the same with -20%.

IGP+Cloud gaming is the future I guess.

 

[ShintaiDK]

Maybe Intel's just not "hip" anymore, with the younger crowd. They only seem to know Apple and Samsung (phones, tablets), and think of Intel like they think of Buick - what their parent drove / used, back in the "olden days".

Its everything. Samsung cant sell expensive smartphones either anymore.

People are still too affraid of spending and less people can spend. Australia also hitting recession next year it seems. China stopped up.

And then there is the dollar issue. In canada everything traded in USD is now 30% higher cost. And its the same story around the world.

 

[AtenRa]

Sorry but if you remove the Tablets from the Client Computing Group(CCG), then both Revenue and Income from Desktop + Laptops are higher than Data center Group (DCG).

 

[Phynaz]

Well, what do they expect, when each new pair of generations of CPUs only gives us a 5-8% increase in overall performance? Why would any desktop user upgrade, unless their PC is 10 years old, or failing?

Desktop is dead, but that's because desktop market == performance, and Intel hasn't been innovating in that dept for a long time, at least in terms of absolute per-core performance. (It's much easier to push process tech innovations, it seems, and simply go the "moar cores" route for server CPUs.)

Desktop is dead because enterprise customers aren't buying them anymore. Everyone is going to virtuals, therefore the rise in the datacenter group.

 

[mrmt]

Desktop is dead because enterprise customers aren't buying them anymore. Everyone is going to virtuals, therefore the rise in the datacenter group.

The last operating system that significantly raised system requirements was Vista in, what, 2007? And today you can pretty much have a good experience in an i3 notebook as long as you have a SSD. So I think the problem doesn't lie with Intel and hardware improvements, but with consumers not needing extra CPU power and software companies not exploting the extra CPU power available on the market.

 

[witeken]

Intel's (INTC) CEO Brian Krzanich on Q2 2015 Results - Earnings Call Transcript:

http://seekingalpha.com/article/332...h-on-q2-2015-results-earnings-call-transcript

That really makes a lot clear.

So 10nm will be a repeat of 14, but now they're prepared with Kabylake. 7nm will insert EUV and might go back to 2 years.

 

[sm625]

The Federal Reserve needs to print moar money. Intel needs to be able to borrow more money at 1% and buy more of its own stock.

 

[Phynaz]

The last operating system that significantly raised system requirements was Vista in, what, 2007? And today you can pretty much have a good experience in an i3 notebook as long as you have a SSD. So I think the problem doesn't lie with Intel and hardware improvements, but with consumers not needing extra CPU power and software companies not exploting the extra CPU power available on the market.

We will have removed all desktops from our environment by the end of 2017. And our laptop refresh schedule has moved form 3 years to 4.

 

[Phynaz]

That really makes a lot clear.

So 10nm will be a repeat of 14, but now they're prepared with Kabylake. 7nm will insert EUV and might go back to 2 years.

I wouldn't say prepared. Kabylake is definitely an emergency. As you can tell from the schedule of having it out in about three years instead of four.

 

[Genx87]

I have been recycling laptops that are over 5 years old by putting an SSD in them. They are fine for most of the company after that. Processor power for an avg business user is fine on Core 2 Duo laptops.

 

[mrmt]

We will have removed all desktops from our environment by the end of 2017. And our laptop refresh schedule has moved form 3 years to 4.

Our company is heading towards very similar conditions as yours for the average office, only the guys using workstations will stay with desktops.

 

[AtenRa]

We will have removed all desktops from our environment by the end of 2017. And our laptop refresh schedule has moved form 3 years to 4.

Are you going to replace them with Laptops or something else ??

 

[Phynaz]

Are you going to replace them with Laptops or something else ??

Virtual Desktops

 

[AtenRa]

Virtual Desktops

Thin ?? Zero ??? AIO Zero ???

 

[krumme]

Units were down 22% on DT and 12% on notebooks, completely explains Altera, gotta fill those Fabs or Samsung and/or TSMC will go right by them.

Desktop is a self fulfilling prophecy though it confirms what Bethune said - you can make a pizza so cheap nobody wants to eat it.

Is that a viable long term strategy?

In 5-10 years is fixed cost still so high vs more variable that you need to sustain a huge staff for inventing the wheel and thereby driving the need for still having all those fabs?

Its damn nice numbers, but imo there is a risk here, and its reflected in shareprice.

 

[Phynaz]

Thin ?? Zero ??? AIO Zero ???

Thin. HP's "T" devices.

 

[AtenRa]

Thin. HP's "T" devices.

Ok thanks,

I believe that VMs are not suitable for small businesses with 5-20 or in some cases even 30-50 PCs. You need a powerful, very expensive server (metal), high cost for OS and applications, high administrator cost etc etc.
Those small businesses will be perfectly fine by using low cost, low power Desktops today and for the near future.

For larger businesses and corporates with 50 PCs and higher, its highly recommend to transition to VMs.