Outgoing Intel CEO Bob Swan previously told PCWorld that he was worried that, when the pandemic hit, PC sales would drop off a cliff. As Intel’s fourth-quarter earnings revealed, the exact opposite occurred.
Intel reported $5.9 billion in profits and $20 billion in revenue for the fourth quarter of 2020, with profits down by 15 per cent and revenue essentially flat. But those numbers far exceeded analyst expectations, and the PC was primarily the cause.
“Fourth-quarter revenue exceeded prior expectations by $2.6 billion driven by record PC-centric revenue, with PC unit volumes up 33 per cent year-over-year led by record notebook sales,” Intel said in a statement in advance of a conference call with analysts on Thursday afternoon. In a related presentation for Wall Street analysts, Intel broke down the PC’s success further: While PC volumes grew by 33 per cent, notebook revenue soared by 30 per cent.
Notebook sales prices, though, dropped by 15 per cent, while desktop sales prices grew by just one per cent. The message? Consumers bought a ton of PCs (and Chromebooks) but weren’t willing to pay much. In fact, possibly worried by the pandemic and the accompanying economic impact, they were willing to pay even less than normal.
Analysts had previously predicted strong fourth-quarter PC growth. IDC reported that global PC shipments grew 26.1 per cent year over year to 91.6 million units, driven by work from home, remote learning, and restored consumer demand. The last time the PC market saw annual growth of this magnitude was 2010, when the market grew 13.7 per cent, IDC reported.
Intel’s other segments weren’t quite as rosy. Intel’s Xeon-based Data Center Group reported sales of $6.1 billion, down 16 per cent. Intel’s Non-Volatile Memory Solutions Group reported flat sales of $1.2 billion. Mobileye, the company’s self-driving car business, fared well: it reported sales of $333 million, up 39 per cent.
Intel expects the PC market to come back to reality. The company said it expects $17.5 billion in revenue during the first quarter, with PC-centric revenue up in the low single digits. That’s positive news, of course: Growth is expected to continue, just not as dramatically.
Both the outgoing CEO, Bob Swan, as well as the new, returning Intel executive Pat Gelsinger are speaking during the conference call on Thursday.