Intel turns in healthy Q4 2017 financials as Spectre and Meltdown loom

Amid some of its stormiest seas in years, Intel released healthy fourth-quarter and full-year 2017 financial results today. The company took in $17.1 billion in revenue for the quarter, up 4% versus a year ago. The company made an operating profit of $5.4 billion for the quarter, up 19% versus a year ago, but that profit was wiped out in part in the final reckoning by a $5.4 billion one-time income tax expense related to foreign earnings under the United States' recent corporate tax reforms. Overall, the company recorded a GAAP net loss of $700 million with that charge. Gross margin increased 1.4 percentage points to 63.1%.

  Q4 2017 Q4 2016 Change
Revenue $17.1 billion $16.4 billion up 4%
Operating income $5.4 billion $4.5 billion up 19%
Net income -$0.7 billion $3.6 billion down 119%
Gross margin 63.1% 61.7% up 1.4 points
Earnings per share -$0.15 $0.73 down 120%

The company's client computing group brought in $9 billion for the quarter, down a hair from $9.1 billion a year ago. Operating income contracted slightly to $3.3 billion, down from $3.5 billion a year ago. Platform revenues (a combined measure of processor and chipset sales) fell 4%, while modems and adjacent product revenue grew 15% year-over-year. Notebook platform revenues were flat on the year, while desktop platform revenue contracted a further 8% year-on-year. PC volumes as a whole were up 1%, desktop platform average selling prices fell 2%, and notebook platform average selling prices fell 2%.

Intel's data center group revenue increased 20% on the year to $5.6 billion, and operating margins grew 59% to $3 billion. Data center platform revenue grew 18% on the year, while data-center adjacencies revenue grew 35%. Revenue from cloud service providers grew 35% on the year, enterprise and government revenue grew 11%, and communication service provider revenue grew 16%. Platform unit volumes grew 10%, and average selling prices were up 8%.

The Internet of Things group took in $879 million in revenue, up 21% from a year ago, plus a further $128 million from Mobileye. Operating income for the Internet of Things group grew 43% to $260 million before a $12 million loss from Mobileye was accounted for.

The Non-Volatile Solutions Group enjoyed 9% revenue growth year-on-year to $889 million, and the division turned a $31 million operating profit. The Programmable Solutions Group, formerly Altera, grew its revenue 35% on the year for $568 million and made $156 million in operating profit for a 95% year-on-year increase.

For its full-year fiscal 2017, Intel brought in $62.8 billion in revenue, up 6% from a year ago. The company made an operating profit of $17.9 billion, up 39% from a year ago, and posted net income of $9.6 billion, down 7% from 2016. The company touted record fourth-quarter and full-year 2017 revenues as part of its results.

For the first quarter of 2018, Intel expects revenue of $15 billion, plus or minus $500 million, with an operating margin of approximately 25%. For the full year of 2018, Intel expects revenue of $65 billion, plus or minus $1 billion, and operating margins of 28%. Effects on the company's finances from the Spectre and Meltdown vulnerabilities, if there are any, will likely appear in Intel's next quarterly report.

Comments closed
    • HERETIC
    • 2 years ago

    And the latest episode in the soap opera-
    [url<]https://www.theverge.com/2018/1/29/16944326/microsoft-spectre-processor-bug-emergency-windows-update-reboot-fix[/url<] My best gestimation on this is Inhell is sitting there thinking "We can fix all this now, with a performance penalty of 30 to 50% in some applications.But we are not going to until we get the penalty below 10%."

    • Krogoth
    • 2 years ago

    Most of the Spectre/Meltdown scare is just mass hysteria. The exploitation requires some level of access to the system. You are already screwed if an attacker got in or has access to your system. Spectre/Meltdown exploit is just another angle of attack (gleaning protected information) after system access is gained.

    The public hysteria is fueled by somewhat recent compromises of fiscal and private information coming from certain companies/organization. The hardware vendors are just trying to cover their collective butts against of a massive flood of lawsuits.

      • the
      • 2 years ago

      I don’t think that the hysteria is unwarranted from what was demonstrated. How often does a cross platform attack come along that attacks a principle of high performance hardware design used over the past 20 years? Never before. Exploiting these flaws via Java Script on different architectures and host OS is nothing short of impressive.

      The only mitigating factor in that this is not a remote exploit.

      Part of the hysteria is that disclosure didn’t go as planned as it happened a week early making everyone involved scramble. The result was a lot of erroneous communication early on, wild speculation on performance impacts (some of which were genuinely true based on use-case) and a last minute rush to get the initial patch of patches out. Initial PR from Intel could have been written by Baghdad Bob. It hasn’t helped that Intel’s patches have been pulled after promising a fix. Intel has totally botched the messaging on this.

      For Intel, this comes on the heels of several Management Engine flaws which could potentially be remotely exploited and if they were, undetectable to the host OS.

      Intel seriously needs to figure out how to do crisis management better.

    • psuedonymous
    • 2 years ago

    SPECTRE might result in an uptick in sales (for both Intel and AMD), probably with several months lag time once ‘fixed’ CPUs are available – i.e. that do not require mitigation patches to be manually applied as is currently the case.
    The reason being enterprise refresh cycles. These usually get pushed back as far as possible until something actually forces an upgrade. A new wave of CPUs with a legitimate flaw-fix rolling out may be the trigger for a genuine upgrade cycle to commence.

      • just brew it!
      • 2 years ago

      It is going to take a lot longer than “several months” for a real hardware fix. Think 2019 timeframe.

        • psuedonymous
        • 2 years ago

        That’s what I’d have called too, but [url=https://www.marketwatch.com/story/intel-shares-rally-after-strong-data-center-growth-tops-street-view-2018-01-25<]apparently "later this year"[/url<]: [quote<]"We’re working to incorporate silicon-based changes to future products that will directly address the Spectre and meltdown threats in hardware,” Krzanich said on a conference call late Thursday. “And those products will begin appearing later this year.” [/quote<]

          • UberGerbil
          • 2 years ago

          “Address” may mean “mitigate” more than “fix.” We’ll see.

        • the
        • 2 years ago

        The problem is that 2017 and 2018 were years planned for major upgrades. AMD re-entered the server market with Epyc and Intel launched their new Sky Lake-SP platform.

        Those that were planning for upgrades in 2018 may end up delaying into 2019 or look at alternatives. Meltdown is a big enough flaw with a performance decreasing fix that there is merit to looking else where or simply waiting. Spectre is the more difficult one to fix and wide spread enough that looking else where isn’t much of an option unless you’re willing to humor in-order architectures were Spectre would not apply.

          • Anonymous Coward
          • 2 years ago

          In order and massively threaded isn’t as bad an option for many server workloads as it might at first seem, IMO. I work on company infrastructure in the cloud, various data processing, and those are already fairly modest performing machines most of the time, we run a lot on Ivy Bridge family Xeons that tick along at 2.5ghz because they are cheap. Sometimes we throw the work at the zoom zoom option, the 3.0ghz Skylake-family Xeon.

          Mostly though, it seems like storage and network is the limiting factor.

          Seems like serious computational work could be done on machines which are vulnerable to attacks if someone gets onto them. You wouldn’t use them as web servers or web browsers.

    • Krogoth
    • 2 years ago

    I don’t expect any significant fiscal impact from Meltdown until at least Q2 2018. It most likely only affect enterprise markets which are most impacted by Meltdown and they may seriously consider alternatives as their next near-future upgrade. It wouldn’t necessary be AMD solutions you mind.

    • Unknown-Error
    • 2 years ago

    Doesn’t Spectre and Meltdown effect ALL OOOE cpus? Plus don’t either or both exploits require direct MoBo access?

      • psuedonymous
      • 2 years ago

      Meltdown only affects some CPUs (Intel, some ARM, possibly some POWER), but Spectre does affect everything. Exploits require the ability to run code on the target machine.

        • just brew it!
        • 2 years ago

        JavaScript is the big concern for Spectre since you are implicitly running untrusted code.

      • just brew it!
      • 2 years ago

      No direct access needed. Spectre can be exploited via malicious JavaScript embedded in a web page. Meltdown could allow one customer in a VPS environment to spy on another customer hosted on the same physical hardware.

        • Anonymous Coward
        • 2 years ago

        And given the size of physical hardware these days, a lot of hardware sharing happens for people/businesses with modest needs.

    • Klimax
    • 2 years ago

    In other news, Intel is to have fixed CPUs this year:
    [url<]https://www.techpowerup.com/240960/intel-processors-to-have-in-silicon-fixes-to-meltdown-and-spectre-this-year[/url<] Note: Author thinks that it will require major update to architecture, which might not be actually the case: [url<]https://www.moesif.com/blog/technical/cpu-arch/What-Is-The-Actual-Vulnerability-Behind-Meltdown/[/url<] [url<]https://www.realworldtech.com/forum/?threadid=174129&curpostid=174150[/url<] First, is ex-engineer from Intel, second is Linus Torvalds (worked also for Transmeta) ETA: Autor -> Author

      • chuckula
      • 2 years ago

      Meltdown is not too hard to fix in silicon. Spectre is harder to fix and may require more invasive changes to silicon.

    • tootercomputer
    • 2 years ago

    Intel comes out with that marvelous Kaby Lake Refresh mobile chips, running four true cores on the i7 version. I bought my wife a Dell 2 and 1 with the 8550U, what a terrific system. Great technology and engineering.

    Then Spectre and Meltdown are revealed, and this incredible FUBAR of late over patches. Some bold and courageous leadership is needed, now. They are different types of crises, but Intel could learn from the Tylenol scare.

    [url<]http://time.com/3423136/tylenol-deaths-1982/[/url<]

    • chuckula
    • 2 years ago

    Some of you pro-Intel paid shills think there will be a negative impact on Intel’s Q1 2018 results.

    Well I’ve got news for your Sunshine: There [b<]WON'T BE ANY[/b<] Q1 2018 results since that would require Intel to still be in business later this year.

      • designerfx
      • 2 years ago

      go home chuckula, you’re drunk

        • UberGerbil
        • 2 years ago

        Going home doesn’t help, because he’s drunk on himself. So wherever he goes, there he is.

      • tay
      • 2 years ago

      You can do better…

    • DancinJack
    • 2 years ago

    Yeah, we weren’t gonna see the result of Spectre/Meltdown in these results really. Last year’s Q1 was 14.8B so I guess they don’t expect to take much of a hit from them. /shrug

      • Concupiscence
      • 2 years ago

      I’m not even sure what the real impact will [i<]be,[/i<] honestly. AMD's bound to pick up some business, but their ability to take advantage of Meltdown paranoia will be hampered by the limitations of their fabs, and Intel's reputation and ubiquity aren't going to just go away because of Meltdown. Within the confines of the PC and server ecosystems, the customers of a near-monopolist that drops the ball in spectacular fashion aren't going to leave en masse. The infrastructure and alternatives for that just don't exist at this point.

        • DancinJack
        • 2 years ago

        This is pretty much what I have been saying about Xeon vs Epyc since Ryzen came out and got a little flak for it. I still don’t know how much impact these bugs will have, but I doubt it ends up hurting Intel too badly.

        • UberGerbil
        • 2 years ago

        Depending on how the inevitable lawsuits shake out, we may see them set aside money for that in future earnings reports. But unless they provide guidance that suggests the F500 is slowing upgrade cycles or reducing purchasing, I agree we won’t see much impact in the medium term. You can even spin this as a positive in the long term, inasmuch as when they do start rolling out chips with a fix* there might be some pent-up demand or an incentive for the paranoid to go out and upgrade ahead of their usual schedule (this will be tempered by being lost in the sea of sales to the large datacenters that upgrade on their own regular schedules regardless).

        * A fix to this particular exploit; I’m skeptical that they’re going to be able to legitimately claim they’ve got a permanent fix to this entire [i<]class[/i<] of exploit.

          • blastdoor
          • 2 years ago

          I think you’re right, especially the part about the forcing upgrades resulting in a net positive.

          I think intel faces some big threats but this isn’t one of them.

          • Klimax
          • 2 years ago

          And both companies are subject of lawsuits. Intel got Meltdown and Specter (shipping new CPUs with them), while AMD is under fire for Spectre. (Mainly allegedly they mislead shareholders during initial PR rounds)

        • K-L-Waster
        • 2 years ago

        Especially when you consider that in the corporate world, the people who decide to spend money aren’t technical people, they’re accountants. Accountants won’t understand the ins and outs of SpecDown, but they do understand “Buy Intel, we know they’re good.”

        It’s the 21st century equivalent of “No one ever got fired for buying IBM.”

        This isn’t fair, or justifiable from a technical perspective. Not that that changes anything…

        [url<]http://dilbert.com/strip/1994-10-13[/url<]

          • mudcore
          • 2 years ago

          The product line ups from the usual suspects are not even close to being fully fleshed out yet. We’ve done some cursory looks into what’s out there right now but it hasn’t gone far. Inquiries with sales have also shown that pricing is a lot closer between Intel vs AMD solutions than one would expect based on CPU list prices as well.

        • Klimax
        • 2 years ago

        And AMD didn’t avoid Spectre which is also harder to fix and workaround. So it is not like AMD is clean itself.

          • K-L-Waster
          • 2 years ago

          Shhh… you’ll upset the true believers.

        • the
        • 2 years ago

        Intel’s brand has been tarnished earlier this year by flaws in their Management Engine. Meltdown is the second big flaw in a year Intel has had to deal with.

        There is also the Atom C2000 fiasco that started gaining publicity about a year ago. While not widely known due to that Atom series relatively small customer base, it was a black eye for Intel as it involved hardware failure of devices. I guess the upshot is that this wasn’t security related, just system stability.

      • the
      • 2 years ago

      I think we will eventually see some financial damage but it has a latency. These flaws are disclosed late in Q1 so immediate impact can’t be discerned. Q2 may have some impact but Intel’s high margin server business probably got an influx of new orders at the beginning of the year as IT budgets were refreshed where purchasing would align into Intel’s fiscal Q2. I’d say Q3 would be the first indicator of any real decline in sales for Intel. Fiscal Q3 this year also doesn’t seemingly have anything new lined up for release anyway (Whisky Lake and Cascade Lake appear to be Q4 or next Q1).

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