Intel Says PC Sales Slump Hits Bottom

By Lawrence Walsh  |  Posted 2009-05-12

If chips and processor sales are an indicator of the downstream health of the IT marketplace, Intel chief Paul Otellini is signaling that PC and server sales may have stabilized. He told analysts that Intel sales are "a little better than we expected."

Intel stock value jumped 3 percent in after hours trading following Otellini’s remarks that personal computer sales had "bottom out" and beginning to rebound. Additionally, he said semiconductor sales are beginning to improve.

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Intel isn’t releasing guidance on its second-quarter financial performance but is indicating that the second three months of the year will basically mirror the first quarter that produced $7.1 billion in revenue. The first quarter was down 26 percent from the same period in 2008.

Otellini’s optimism is welcomed news to the IT manufacturer and value-added reseller communities, which have seen PC and server sales fall over the last several quarters. IDC recently reported that PC sales fell more than 7 percent worldwide and slightly more than 3 percent in the United States.

Since the beginning of the year, PC and server vendors have released a series of new products at lower price points to meet end users’ decreased budgets and buying power. In the Channel Insider 2009 Market Pulse Report, solution providers reported desktop and notebook PCs continue to be commoditized and profitability is declining.

Intel may be bullish on future prospects, but it's remaining mum on the prospects of being hit with the heaviest fine by the European Union for alleged antitrust activities against processor rival Advanced Micro Devices. Otellini declined to comment on the potential of the EU levying a $1 billion-plus fine, calling it "rumors."