Intel Reports Record Profits for 2011

IntelToday, Intel released their earnings for 2011, wherein they reported their annual revenue was up by 24%, bringing in $54 billion. This report breaks Intel’s previous record of revenue. The Intel Architecture Group (IAG) responsible for the devices that run Intel CPUs and chipsets grew in revenue to $5 billion, a 64% increase from the same period in 2010. The PC Client Group (PCG) and Data Center Group (DCG) both saw revenue growth of 17%. This puts the PCG at $35.4 billion and DCG at $10.1 billion of revenue from the same period in 2010. The Intel Mobile Communications and McAfee Inc. divisions contributed $3.6 billion in revenue.

The only division to report a loss for Intel was the Intel Atom microprocessor and chipset division, which generated only $1.2 billion and is down by 25% from the same period in 2010.

This gives Intel approximately $21 billion in cash, where they paid dividends of $4.1 billion and used $14.1 billion to repurchase 642 million shares of stock. Intel president and CEO Paul Otellini gave this statement in the report:

“2011 was an exceptional year for Intel. With outstanding execution the company performed superbly, growing revenue by more than $10 billion and eclipsing all annual revenue and earnings records. With a tremendous product and technology pipeline for 2012, we’re excited about the global growth opportunities presented by Ultrabook systems, the data center, security and the introduction of Intel-powered smartphones and tablets.”

Analysis: Intel released their long awaited Sandy Bridge architecture back in January 2011. This is probably where they saw the most growth because it offers higher clock speeds and higher overclocking potential at a much more reasonable price point than previous generations of Intel products. I’m currently waiting for the release of the 8 core CPU, which I think is going to happen soon if recent motherboard configurations are anything to go by.

Intel and Microsoft are both currently pushing hard into the tablet market. What’s troubling to me is that neither of them is willing to budge on their prices, thus increasing the cost of the Windows 8 tablet from $599 to $899 and not keeping it within a reasonable price point for consumers, as reported by DigiTimes. I don’t think 2012 will be as great of a year for Intel, and I can’t see them backing down on the price point for their tablet technology anytime soon.

The reason I believe this won’t happen is because Intel has never moved to reduce the price on anything unless they receive a financial incentive to do so, such as vendors buying a certain amount of product. This is normal for any business, but from what I’ve seen over the years, Intel is more inclined to use an iron fist rather than a velvet glove in these situations. They have good reason to be stubborn, though: their Sandy Bridge products are decimating their main opponent, AMD, with their Bulldozer product line when it comes to performance.

As for right now, I see Intel’s profits going down this coming year, but it won’t be a major hit to the company.


About Brandon Mietzner