Intel 1Q16 Earnings Call Notes

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Brian M. Krzanich – Chief Executive Officer & Director

Evolving from a PC company to one that powers the cloud

“We are evolving from a PC company to a company that powers the cloud and billions of smart connected and computing devices. The Data Center and Internet of Things businesses are now Intel’s primary growth engines, and combined with Memory and FPGAs form and fuel a virtuous cycle of growth.”

Not worried that PC will shrink to a point where we wont be able to fund innovation

“I’m not worried that PC will shrink to a point where the scale will get large enough to fund either the factories or the other innovations. The fact that we talked about the restructuring actually makes us more profitable in the PC. That’s allowing us to invest even more in those growth areas. Remember also, those growth areas are growing, and so they are replacing some of the volume in the factories as they grow.”

Restructuring to move into growing segments besides PCs

“Now, let’s talk about the PC. You asked, how do we take a look at the PC long term and how do we make sure we’re making the right investments, which to me that’s the key. That’s what we really tried to do with this restructuring, is take a look at the areas that are growing, that we believe we can bring innovation to, that will make a difference to the end user. You’re going to see more investments in 2-in-1s. You’re going to see more investments in thin-and-light devices. You’re going to see us push even harder on high-end gaming systems, which are growing at a very fast rate, and they tend to buy up the stack to the very, very top. And then we’re continuing to gain share in segments like set-top boxes, which are becoming more and more PC-like in their capabilities, if you think about it from a hardware standpoint.”

We are always paranoid about the competition, always driving

“having been raised by Andy Grove, always paranoid about the competition, always driving. And we know that we live or die by the performance of our products. We believe if you take a look at our roadmaps, we have a strong competitive leadership that should allow us to continue to have the position in the market that we currently have.”

Strategy is going beyond the CPU

” our strategy that is becoming much, much broader than just the CPU. What we are trying to do is really provide top-of-rack to bottom-of-rack solutions that bring, that work together and bring performance across the whole rack. And that starts with Rack Scale Architecture itself, which is a very unique architecture that will allow people to build racks in a much denser and lower cost way to Silicon Photonics for within rack communication. Then we’ve got a 3D XPoint, and then you have our whole CPU architecture from networking, storage, up through server.”

Stacy J. Smith – Chief Financial Officer & Executive Vice President

Expect PC markets to decline in the high single digits in 2016

“We now expect the PC markets to decline in the high single digits in 2016 versus our prior forecast of mid-single-digit decline. Our projection of the PC market remains more cautions than third-party estimates. ”

TAM wasn’t strong and customers were bringing down inventory levels

“We were impacted by a TAM that wasn’t terribly strong and the fact that our customers were bringing their inventory levels down some.”