Intel (INTC 2.20%) reported yet-another strong quarter, achieving "record revenue" of $14.6 billion and guiding to a record of $14.7 billion for the fourth quarter of 2014. Long-term Intel stockholders have been rewarded with a business that has grown better than expected this year, and a share price that has risen an impressive 25% year to date.
With that in mind, it's worth highlighting the following five quotes from Intel's most recent earnings call in order to get a better perspective on how the business is doing and what the future looks like.
Customized server chips proving to be a hit
Intel's management has spoken quite often about the work that it is doing in providing customized processors for its data center customers.
At Intel's investor meeting last year, management cited Facebook, eBay, and Nuance as customers of its customized chips. More recently, it was widely reported that Intel was providing Oracle with a customized version of its high-end, 15-core server processor.
In fact, according to CEO Brian Krzanich, Intel now offers "roughly 35" custom Xeon processors, and "over the last year volume from custom [stock keeping units] has grown at 3x the rate of [Intel's] off the shelf product."
It looks as though Intel's plan to offer customized server chips is working out well.
Share gains in the PC market
Last year at its investor meeting, Intel signaled that it had hoped to gain market share in the low end of the PC market.
"First, we saw in Q2 that we gained a relatively significant amount of market share once everybody had reported," Intel CFO Stacy Smith said during Tuesday's earnings call. "[W]e'll wait to see all the third party results come in to know for sure, but our sense is that we gained some share in the third quarter."
Given that Intel reported that its PC Client Group revenue grow 9% year-over-year during the third quarter while rival Advanced Micro Devices (AMD 0.79%) saw its "computing and graphics" division decline 15.5% year over year, it's probably safe to assume that Intel gained market share during the quarter.
"Substantial improvement" in mobile profitability
Intel reported losing about $1 billion in its mobile group during the third quarter on revenues of just $1 million. Ross Seymore from Deutsche Bank asked management about the revenue and profitability trends that Intel expects from this division during 2015.
Though Smith did not want to "provide a specific forecast" for the financials of Intel's mobile group during 2015, he did say that Intel plans "to make a substantial improvement in the profitability of the segment next year."
Smith reiterated that while it is Intel's goal to get this division profitable, investors shouldn't expect that during 2015.
More LTE wins in the works
As those following Intel's mobile efforts are likely aware, Intel announced its stand-alone XMM 7260 LTE-Advanced cellular modem a little while back. The solution, according to Krzanich, will be featured inside of some variants of Samsung's Galaxy Alpha and Galaxy Note 4 smartphones.
Further, Krzanich noted that devices that utilize the XMM 7260 will be found "in almost every geography."
Stressing that Intel is one of only two vendors shipping category 6 LTE-Advanced modems right now, Krzanich stated that Intel "feel[s] good about [its] roadmap" and that "going beyond [category 6]," Intel should be "highly competitive" and "at or near the leading edge."
A different strategy for smartphones
Intel's game plan for smartphones seems to be changing pretty significantly, and Krzanich gave some insight into that new strategy:
If you take a look at what we're driving on our phone strategy, we're really driving a strategy that, rather than pull and push on our own into the phone space, we're really going with strong partners that are in that space already and have the linkages and the customer relationships.
Krzanich refers to its recent deal with Spreadtrum as a "perfect example" of this strategy. He also indicated that "over time" the chips built as part of these partnerships will eventually be manufactured in Intel's own manufacturing facilities. This, according to Krzanich, should give Intel and its partners "a competitive advantage and a cost advantage" relative to competitors.
This conference call offered a lot of interesting insight into Intel's business, but it, quite frankly, felt like a teaser for the company's investor meeting scheduled for Nov. 20. It's about a month away, but for investors who follow Intel, it'll likely be well worth the wait.
