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If a company you owned announced they were confident enough to spend a lot of money in research and development and updating and modernizing plants why would you sell that stock or would you say something good is up.
Intel announced on its fourth quarter earnings call a week ago Thursday that it's ramping up capital spending in 2013.
By about give or take an extra two billion dollars to invest in chip manufacturing.
After that he shares did not respond positively.
Intel dropped more than 6% and then something happened that no analysts was really expecting and that is that Intel's competitor Qualcomm past Intel's market cap.
What or investors spooked and should they not be.
We wanted to bring in Stacy Smith Intel chief financial officer and executive vice president to clarify.
What company really believes in a Fox Business exclusive in studio thank you for coming in to to -- -- from California.
So so analysts and investors were spooked.
Tell us why we shouldn't have been.
But the announcement that while your outlook was at least perceived to be a little soft you were still going to up.
In certain way shape and -- -- capital expenditure.
-- an actual or predicting is that won't get into the back half of the year as a result of the product cycle we're in from old to books to the Davidson to tablets.
There we're gonna start to see a meaningful increase in volumes -- and frankly our manufacturing advantage.
It's our strongest competitive energy gives us performance leadership because -- power leadership because this cost leadership.
So I'd actually say is an investor if we weren't investing in our manufacturing advantage that would be a bad -- Right what people might worry because they think would have.
Something's really bad they really actually do believe it because Intel just to give the history to people traditionally at the height of the financial crisis was saying we're gonna build the plant you.
And how does that work out for you in the end is there enough business enough customers to soak up the capacity of those plants do you believe that will be the case -- 2013.
Oh yes who we expect -- over the course of 23 team.
Dinner back tougher factors are running -- cost structure looks very our gross margin reduction little succeeds when you say faulty.
Mean denying the 8% to mean a 100% we fall for us is ninety -- percent that tends to be full we always wanna have a little bit extra so that we can respond to upside in -- for new customers and things like -- Who will be the most robust customer so far -- -- a lot changes in here in this business.
No -- ultimately segment of the business we expect that the data center will grow.
In the double digits again and it in the data center business for us.
Is really benefiting from all these devices that are computing connecting to an Internet.
Driving a build out the big IP days -- gigantic surfers congestion and business to absorb all of that activity between people on Smartphones in Taiwan with somebody here in the US exactly and I think -- people don't understand about our business is that it's not just -- servers the storage is a communications infrastructure were were really.
Replete throughout the -- -- I think that's going to be robust and then where.
I think we'll also -- unit growth.
Is in that scene between tablets and convertibles and untouchables and -- books.
I think that's -- we're gonna see the unit growth and we get into the back half of this you know let's.
Get some of the numbers Intel has reported.
And again not believe these numbers change sometimes pretty quickly 'cause in real time -- you will be shipping Intel chips and an equipment in seven Smartphones and ten tablets.
Are those number still correct today.
The worry we're we're in we're in eight Smartphones across twenty countries are reading -- we have 120 -- tablet design wins and you know if you really shows the product cycle at the beginning of the year we weren't in any tablets -- weren't in any Smartphones and you can see that momentum starting to build.
Hindsight -- that.
-- linked to -- -- -- would you prefer to have been a clot earlier on this because there are dozens and dozens if not hundreds of different designs of Smartphones in every country you know it's.
Eat it it's a journey as opposed to an event were there today we have leadership and performance we have leadership in terms of power.
We're gonna build on our position from here.
Paul Otellini -- -- What he called -- felt what.
That's a cross between a phone and the tablets so everybody thinks it's all getting smaller guess what in China they're carrying these things they're bigger but there are small enough to fit in the the inside jacket pocket of -- men's suit.
Word you know women's side pocket of a woman suit what.
Companies tablets is in -- in going to be.
Why don't talk.
-- I don't wanna preannounce we we we leave it to our customers should announce designs but I think you hit the trend exactly right you're seeing Smartphones getting larger.
You're seeing in tablets getting smaller.
All of these are now consuming more and more compute power which is you know really our core business and we look at it anything that computes.
Is part of our market and it sets up for pretty excited.
Future -- has the power until the shown when a year and change ago you guys said.
-- books are now the way to go -- these are these ultra thin instant on them they look like power Macs -- set truck.
And you've got an industry to completely change its assembly line structure -- the hardware guys Dell HP Asus Acer Lenovo.
You're not quite at the 40% adoption rate that you had had really announced.
More like almost half of that when we hit the 40%.
You know it I think the way your two face exactly right a year ago for us ultra books was really just the concept and you fast forward to where we ended 2012 frightened pretty much reinvented the notebook market told -- books.
It again it's a journey we now window -- that enables touch.
We have a new processor coming out there in the first half of this your call has well what shall enable even more power vision devices with more performance.
I think we're on a great journey here -- -- it is where the excitement in the market is.
Dell I have to get this at least a reaction of one of your biggest customers because when I talk to people in the know they say the -- -- ultra book is absolutely superb.
Would be a change -- that you see if Dell were to be taken private the news just breaking with the Wall Street Journal that it is on track to continue this path.
To not been publicly traded anymore.
-- you know Dick dole over the years has has I think been a great partner interest in two ways one is they bring out these truly innovative products and particularly.
Now as the focus that the enterprise segment of the market -- they have some some really great devices.
And secondly they've been in you know one of the most efficient.
Supply line management companies really in the -- -- Change if it goes private in the know.
But I think again any of the the new investors to -- assuming that this officer going to be interest in those you know same characteristic -- innovative products on the market.
And -- really efficient producers so -- I think that would continue.
Let's open the Stacy thank you very much thank you Stacy Smith -- the chief financial officer and executive vice president over Intel we appreciate coming here in a Fox Business explicit there's revenues they have next time.
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