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Intel Quarterly Results May Not Be Good News for PC Sector

On Thursday Intel posted its latest quarterly results, and it may leave some PC makers a little nervous.

The chip giant revealed that its PC Client Group generated revenue of $8.5 billion USD during the fourth fiscal quarter, down 1.5-percent sequentially and down 6-percent year-over-year. On a yearly basis, the PC Client Group had revenue of $34.3 billion, down 3-percent from fiscal 2011.

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini, Intel president and CEO. "We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center."

The drop in Intel's PC Client Group shouldn't come as a surprise given the consumer market's growing focus on tablets supplied by Apple, Google, and Samsung among others. There are also the new hybrids that blur the lines between tablets and notebooks, and those "phablet" devices that merge tablet and phone into one form factor.

Does this drop in sales mean we're truly entering the Post-PC era? That remains to be seen. At CES 2013, the big theme seemed to be the connected home, as many companies showcased a slew of tablets, smartphones, networking hardware and Wi-Fi capable HDTVs sharing the same space and content. While there will always be a place for the desktop form factor, the show clearly made it obvious the industry's focus is on mobilized computing and content sharing.

With its x86-based partners jumping into the tablet and smartphone pool, it only made sense that Intel followed suit and challenge mobile industry leaders Qualcomm, Texas Instruments and Samsung. Like its desktop and notebook partners, Intel needed to find an additional stream of revenue as consumer tastes continue to switch over to thin, high-performance mobile products.

"As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing," Otellini added.

Despite its PC Client Group's decline, the quarter wasn't exactly gloomy for Intel. Its Data Center Group had revenue of $10.7 billion, up 6-percent from 2011. On a quarterly basis, the Data Center Group generated revenue of $2.8 billion, up 7-percent sequentially and up 4-percent year-over-year. The company also saw an overall gross margin of 58-percent, 1.0-percentage point above the midpoint of the company's expectation of 57-percent.

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