Intel zero revenue growth expected in 2014

As sales of personal computers continue to slump, so does the outlook for the world’s largest computer chip maker Intel, which announced today it does not expect any revenue growth in 2014.

Intel saw revenue fall by 4% in 2013 compared to 2012. However, the company pointed out today that the desktop computer market is beginning to stabilize.

Intel’s PC chip division reported revenue of $8.6 billion for the fourth quarter of 2013, slightly higher than Q4 2012 ($8.5 billion). Even though the sales of chips in the dwindling PC market improved, demand for larger systems disappointed.

Brian Krzanich, who was named CEO of Intel last May, said:

“We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago.”

“We’ve built a strong foundation for our business by bringing innovation to the market more quickly across a wide range of computing platforms. For example, at CES, we demonstrated multiple devices that weren’t on our roadmap six months ago.”

Intel reported a net profit of $9.6 billion for 2013, 13% less than in 2012.

Intel quarterly

(Source: Intel)

PC sales have fallen for six successive quarters, making way to the much more popular tablets and smartphones. Manufacturers of computer chips have been desperately trying to grow their other divisions in order to reach their growth targets, and in many cases just to remain afloat.

Intel concentrating on data center business

In order to make up for its fall in computer chip sales, Intel has been concentrating on boosting its data center business, which saw an 8% increase in revenue in Q4 2013 compared to Q4 2012. Most experts had expected a bigger rise.

Stacy Rasgon, an analyst with Sanford C. Bernstein, said to the Wall Street Journal that the results were “awful compared to the expectations they were setting.”

The BBC quotes Patrick Wang from the advisory company Evercore, who said “The incremental nugget we got from fourth quarter earnings was that data center group disappointed again.” He added, though, that investors are expecting a good performance from the division this year.

Intel annual

(Source: Intel)

According to Intel’s chief financial officer, Stacy Smith, the data center division’s revenue is expected to rise by over 10% this year.

PC World quoted, Pat Moorhead, principal with Moor Insights & Strategy, who wrote in an email:

“Given the PC market was in the toilet and the phone and tablet division didn’t financially perform well, they did well in 2013. In 2014, Intel will need to turnaround mobility, defend the datacenter from AMD, ARM, and Broadcom, and gracefully enter the growing Internet of Things client market.”

In an article in Forbes, Samantha Shaft wrote that while 2013 results were not too far from expectations, what is pushing Intel shares down is the look ahead.