Intel Says PC Market, Chip Inventories Stabilizing

By Jessica Davis  |  Print this article Print

Intel reports higher than forecast revenues for its second quarter and declares that Intel and the overall technology industry, including PC sales, show signs of stabilizing after a long and punishing recession. Consumer sales have led the way in PC sales during the recession, but a corporate PC refresh is likely on the way.

Intel (NASDAQ:INTC) executives, reporting revenues and earnings that beat previous estimates, told analysts that both Intel and the overall technology industry are now showing signs of stabilizing. That statement comes three months after Intel CEO Paul Otellini told analysts that the PC market had bottomed out.

And processor giant Intel should know. The processors and other chips it makes are the basic building blocks of computers and many other devices sold both to the consumer and corporate markets.

Otellini told analysts during a conference call following the company's earnings announcement July 14 that inventories in the channel were also in good shape—and that included Intel's inventories on hand, inventory in distribution and inventory at OEMs.

"The combination of those three really is what made the quarter happen the way it did, and also it give us confidence in the second half," he said.

Intel Chief Financial Officer Stacy Smith told analysts that Intel actually was surprised and had less inventory on hand than the company would like, but because it is currently running its chip manufacturing facilities under capacity, filling the demand would not be a problem.

Intel reported revenue of $8.0 billion, down $1.4 billion from the same period a year ago but up $879 million sequentially. Net income, excluding a $1.45 billion antitrust fine levied by the European Commission, came in at $1 billion, down $552 million from the same period a year ago but up $420 million sequentially. Including the EC fine, Intel reported a net loss of $398 million.

Intel executives said they expect Q3 revenue to come in at about $8.5 million.

Otellini told analysts that much of the company's strength during the recession came from consumer demand, not corporate demand, but that the stage could be set for a corporate refresh in 2010.

"There's likely to be a refresh coming, when you look at the aging of products that are out there..." Otellini said. "At some point, those need to be refreshed. I think there is an opportunity for that to happen around Win[dows] 7 and our new technologies, which work pretty well together in terms of new stability and security features."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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