Intel Says PC Market, Chip Inventories Stabilizing

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."