Intel reports lower profits on slightly higher revenues

Intel Corporation, the largest and most highly valued semiconductor chip maker in the USA, said its profit for the first quarter fell by 4.8% to $1.95 billion from $2.05 billion year-on-year.

CEO Brian Krzanich

On the other hand, revenue rose 1.5% to $12.76 billion compared to a year earlier. In January, Intel projected its revenues at $12.8 billion, give or take $500 million. The gross margin percentage was 59.7%. For the second quarter, Intel said it projects revenue of $13 billion, plus or minus $500 million.

Analysts said Intel continues to suffer due to the undeniable shift in customer spending from laptop computers (which rely heavily on its microprocessors) to tablets and smartphones (where Intel does not have a commanding advantage). Intel, however, is showing signs that pains from the shrinking personal computer market are easing.

New Intel CEO Brian Krzanich said the pace inside Intel and its progress with customers is accelerating. Krzanich is trying to speed-up Intel's push beyond the PC and more into tablets and smartphones.

His target is to sell 40 million chips for tablets in 2014. Intel sold five million chips for tablets in the first quarter, a feat Krzanich described as "strong progress" toward its 40 million unit goal. Krzanich said Intel is now designing 90 chips for tablets.

Intel's continuing shift to smartphones and tablets and away from PCs makes sense in light of recent data. Market and IT research firm International Data Corporation or IDC recently said global PC unit shipments fell 4.4% in the first quarter. Rival Gartner, Inc. estimated the decrease at 1.7%.

Intel's quarterly figures for the first time include a mobile and communications group and an Internet of Things Group. Krzanich has also emphasized the possibilities presented by wearable devices and the Internet of Things.

Intel said revenue for the Internet of Things business came to $482 million for Q1, up 32% on-year. Operating income improved by a large 84% to $123 million. It said sales of chips for point-of-sales systems and automotive applications were behind the positive figures

The mobile and communications group, however, posted an operating loss of $929 million. Revenue plummeted 61% to $155 million.

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