Intel: Business strong, reputation at risk as Spectre, Meltdown issues linger
SANTA CLARA — With its reputation at stake following a recent embarrassing rash of security flaws in its semiconductor chipsets, Intel said Thursday it is working on fixes for the problems, but that full solutions won’t be available for several months.
Intel Chief Executive Brian Krzanich addressed the effects of the Spectre and Meltdown flaws while speaking on a conference call to discuss the company’s fourth-quarter business results. Krzanich sought to alleviate concerns about the flaws, which are said to potentially affect nearly every computer, laptop and mobile device running on Intel’s chips, but acknowledged that the company can’t solve the matter overnight.
“We’ve been working around the clock to address Spectre and Meltdown,” Krzanich said. “We are acutely aware we have more to do. Security is a top priority for Intel. These circumstances are highly dynamic. Security has always been a priority (and) an ongoing journey.”
But for a company that claims to be so stringent about security–Intel acquired security-technology company McAfee in 2012 for $7.6 billion, then spun the company out last year and still owns 49 percent of McAfee–the extent of the Spectre and Meltdown flaws has been nothing short of a black eye for the company. And earlier this week, Intel looked like it couldn’t shoot straight, when it advised people to stop installing security patches it released to fix the flaws due to reports that those patches were impacting the performance of devices in which they had been installed.
“It goes without saying that the Spectre (and) Meltdown issue will be top of mind both internally and externally at Intel,” said Mark Hung, research vice president at Gartner. “A solution that can completely fix the security issue while having no performance impact on the CPU will not be available in the short term, so this is likely to linger for at least the next few months.”
And in a statement in which Intel reported its quarterly results, the company said it doesn’t expect to be done with Spectre or Meltdown any time soon.
“We have and may continue to face product claims, litigation, and adverse publicity and customer relations from security vulnerabilities and/or mitigation techniques, including as a result of side-channel exploits such as “Spectre” and “Meltdown,” which could adversely impact our results of operations, customer relationships, and reputation,” Intel said.
While the reaction to Spectre and Meltdown remains in the issue of the moment for Intel, and its customers, investors put more focus on the company’s fourth-quarter results, which came in better than Wall Street analysts had expected.
Intel shares climbed 4.5 percent, to $47.32, in after-hours trading after the company reported a fourth-quarter loss of $687 million, or 15 cents per share, on revenue of $17.1 billion. Intel’s results were impacted due to a tax expense of $5.4 billion as a result of the recently passed tax reforms. However, excluding those and other one-time items, Intel reported a profit of $1.08 a share.
By that measure, Intel surpassed the estimates of Wall Street analysts, who forecast the company to earn 87 cents a share on $16.34 billion in sales for the quarter that ended Dec. 30.
Intel said its performance was led by gains from its data-center business, which turned in sales of $5.6 billion, or a 20 percent increase over the same period year ago. Personal computer sales remained Intel’s biggest revenue generator, with $9 billion in sales, but that amount slipped by 2 percent from the fourth quarter of 2016.
“Their data center offerings continue to be strong and their investments 5G, IOT (internet of things) and autonomous vehicles over time will keep them growing,” said Tim Bajarin, president of San Jose tech consulting firm Creative Strategies. “Intel is still in a strong position to influence tech related markets and I don’t see their leadership positioning changing anytime soon.”
One thing that Intel didn’t address Thursday was CEO Krzanich’s late-2017 stock sale, in which he sold off some of his Intel holdings worth $25 million. Krzanich’s stock sale has raised eyebrows due to its occurring prior to Intel notifying the public about the Spectre and Meltdown chip flaws. Intel has said that Krzanich’s stock sale was done according to a pre-set timetable, and had nothing to do with inside information relative to the chip-flaw debacle.
Rob Enderle, president of tech research firm the Enderle Group, said that the combination of the Spectre and Meltdown matters, along with the timing of Krzanich’s stock sale will cause many eyebrows to remain raised with regards to how Intel is addressing controversial parts of its business.
“They had a very strong report for the past quarter but one that doesn’t reflect the growing storm clouds that their CEO clearly anticipated with his stock sale but is likely still not sharing publicly,” Enderle said. “A CEO purchasing stock might just be trying to create a false positive image; one that runs from their stock is a red flag of epic proportions which suggests we are not seeing the entire dire story yet.”
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https://www.mercurynews.com/2018/01/25/intel-says-spectre-meltdown-chip-flaws-could-harm-its-reputation/