A Look at Intel's Fiscal 1Q16 under Its New Reporting Structure
Intel’s dynamic business structure
In the previous part of the series, we saw that Intel (INTC) has changed its reporting structure and will now report its revenues and expenses among seven business segments. Let’s understand the current financial situation and future growth prospects of each of these segments in detail, starting with the CCG (Client Computing Group).
About Client Computing Group
In fiscal 1Q15, Intel integrated its PCCG (PC Client Group) and MCG (Mobile and Communications Group) and formed the CCG. The CCG accounts for 60% of Intel’s revenue. Until fiscal 4Q14, the PC (personal computer) segment was reporting growth, whereas the MCG was reporting falling and negative revenue.
The CCG has been reporting falling earnings for the last four quarters, and it’s likely to report falls in fiscal 1Q16 as well.
Computing industry forecast
The slowdown in global PC sales is a pressing issue for Intel. According to Gartner, global PC shipments fell 9.6% YoY (year-over-year) to 64.8 million units in 1Q16 as weakness in China’s (FXI) economy continued. This was the sixth quarterly fall in a row.
Intel’s efforts in computing
Intel has a partnership called Wintel with Microsoft’s (MSFT) Windows. The launch of Windows 10 failed to encourage people to upgrade their PCs, which led to falling revenues. Intel is now focusing on notebooks, desktops, and two-in-one processors for gaming and enterprises.
With its RealSense depth-perception technology, the company wants to tap into the VR (virtual reality) trend. It has unveiled the Skull Canyon NUC (Next Unit of Computing) mini PC to bring a desktop-like gaming experience to notebooks.
For enterprises, Intel has unveiled a new software called Intel Unite, which promotes the mobile workplace. The application enables users to view and interact with content and share screens wirelessly. Intel has also unveiled a wireless display for conference rooms called Pro WiDi.
Competition
Intel dominates the PC processor market with more than 80% market share. The remaining share is held by Advanced Micro Devices (AMD), which is looking to unveil its Zen architecture in 4Q16.
Zen will be manufactured using Samsung (SSNLF) and Global Foundries’ 14nm (nanometer) FinFET (fin-shaped field effect transistor) process node. It’s likely to pose tough competition to Intel’s 14nm Skylake processor until Intel launches its 10nm Kaby Lake processor sometime in 2017.
In the next part of the series, we’ll look at the health of the mobile segment of the CCG.