Intel Server-Chip Sales Fueled by Mobile Data, CFO Says
Intel CFO Stacy Smith
David Paul Morris/Bloomberg
Stacy Smith, senior vice president of finance and chief financial officer of Intel Corp.
Stacy Smith, senior vice president of finance and chief financial officer of Intel Corp. Photographer: David Paul Morris/Bloomberg
April 27 (Bloomberg) -- Stacy Smith, chief financial officer at Intel Corp., talks about the outlook for growth in the markets for cloud-based servers and personal computers. Smith also discusses Intel's smartphone partnerships and acquisitions. He speaks with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
Intel Corp. (INTC), the world’s biggest chipmaker, will continue to benefit as the spread of mobile devices fuels “explosive” growth for processors used in data centers, Chief Financial Officer Stacy Smith said.
“There’s a significant, maybe even an insatiable, demand driver for more and more performance and computing power that’s moving into the cloud,” Smith said in an interview yesterday. “What gets lost is the explosive growth of all of these devices connecting to the Internet is driving a $10 billion dollar server business.”
Intel said demand for chips used in computers that provide services and data over the Internet -- so-called cloud computing -- won’t be short-lived. Increasing sales of mobile phones and tablets are generating a need for data served up by Intel chips, helping compensate for its failure to deliver processors that handset makers want. Intel forecast second-quarter revenue that may be about $1 billion more than analysts had estimated.
The company, which has been trying to convert its dominance of the personal-computer market into orders from phone makers for more than 10 years, will start to demonstrate progress later this year, Smith said.
On April 19, Intel said second-quarter revenue will be $12.8 billion, plus or minus $500 million, compared with the $11.9 billion average, at the time, of analysts’ projections compiled by Bloomberg.
Shares of Santa Clara, California-based Intel have rallied since then, gaining for five consecutive trading days. The stock rose 17 cents to $22.80 at 4 p.m. New York time the Nasdaq Stock Market.
Cloud Computing
Underlining the importance of new cloud-computing centers, the companies that run them -- Google Inc. (GOOG), Facebook Inc. and Yahoo! Inc. -- have come to rival computer makers such as International Business Machines Corp. among Intel’s largest customers, Smith said. Google and Facebook typically build their own servers with chips bought directly from Intel, he said.
Even as mobile devices fuel server-chip sales, Intel hasn’t given up on getting its processors into the phones themselves. While orders from mobile-phone makers won’t “change the fundamental growth path of the company,” Intel needs to make progress to prove it can make chips that can deliver performance while working only off battery power, Smith said.
“You’re going to see us with phones in the marketplace with Intel silicon in the not-too-distant future,” he said. “The first one is likely to be game-changing for us from a perception standpoint.”
While the company is open to delivering its own phone designs and software to potential customers and even co- branding, he said, Intel will concentrate on providing components. No phone currently on sale is based on an Intel processor.
Apple Inc. and other tablet and handset makers have chosen rival designs from Qualcomm Inc. and Texas Instruments Inc. using technology from ARM Holdings Plc.
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net;
To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net.
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