Intel reports Q3 earnings and it's not quite as positive as usual

Written by Jennifer Allen

October 26, 2020 | 13:00

Tags: #business #earnings #earnings-reports

Companies: #intel

Intel has reported its Q3 2020 financial results, and it's been another very profitable quarter, albeit one that perhaps isn't quite as positive as the firm was hoping for. 

In the third quarter of 2020, Intel reported $18.3B in revenue, a drop of $0.9B over the same quarter a year ago. It also reported $4.3B in net income which was a 29 percent drop on Q3 in 2019. Its overall gross margin was also a tad weaker at 53.1 percent for Q3 compared to last quarter's 53.8 percent and a year ago's 58.9 percent. 

When you break down the revenue of individual areas, it's also a little mixed. Client Computing Group revenue was up only 1 percent with the general thought being that this is because desktop sales are down while notebook sales are up, causing a fair bit of fluctuation in the area. 

More significantly, Data Centre Group revenue is down by 8 percent on a year ago and 17 percent compared to last quarter. Intel has suggested this is down to a decrease in enterprise and government sales. 

The biggest loser is the Internet of Things Group revenue which was down 33 percent on a year ago which is considered to be in part due to US government export restrictions and, you guessed it, the pandemic. It's a similar story for the Non-Volatile Memory Solutions Group with a decline of 11 percent compared to a year ago, but we already know that Intel is selling off the NAND side of its business to SK hynix. 

Intel CEO, Bob Swan, explained that "our teams delivered solid third-quarter results that exceeded our expectations despite pandemic-related impacts in significant portions of the business," continuing "nine months into 2020, we're forecasting growth and another record year, even as we manage through massive demand shifts and economic uncertainty. We remain confident in our strategy and the long-term value we'll create as we deliver leadership products and aim to win share in a diversified market fuelled by data and the rise of AI, 5G networks and edge computing."

It's certainly an unusual time for everyone so perhaps the most interesting thing will be to see how things weigh up this time next year. Still, it could be a challenging future for Intel with the likes of better processors from AMD soon to emerge, and Intel clearly trying to shift its focus a bit, leading to some potential teething issues. 

Alongside its earning release, Intel also used the time to unveil the Iris Xe MAX brand which it will launch its first discrete GPU through. Expected to be based on the Xe LP architecture and to target the mobile market, it's likely to shake things up in the ultraportable world but don't expect great performance. Uncovered Geekbench 5 benchmarks suggest that the Iris Xe MAX will only just outperform the GeForce MX330. Still, most users looking for an ultraportable laptop know they're not going to get great gaming performance so it should work out.

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