Intel: Messy quarter ahead, PC worries abound

Intel: Messy quarter ahead, PC worries abound

Summary: Intel will report its first quarter results and they are expected to be messy on many fronts. The company had Sandy Bridge chipset woes, closed two acquisitions and is facing a slowdown in PC sales.

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Intel will report its first quarter results and they are expected to be messy on many fronts. The company had Sandy Bridge chipset woes, closed two acquisitions and is facing a slowdown in PC sales.

Wall Street is expecting earnings of 46 cents a share on revenue of $11.59 billion, but a miss wouldn't shock analysts. The big questions will revolve around whether Intel has an answer for tablets---the chip giant will begin getting Atom-powered devices in the field---and the outlook.

Piper Jaffray analyst Auguste Gus Richard is expecting a rough quarter. Intel will include results from McAfee and Infineon in its earnings report along with a $700 million charge over Sandy Bridge chipset problems. The company also reclassified the way it reports its divisions given those two deals.

Richard said in a research note that PC makers are hoarding components following the Japan earthquake. In addition, PC builds are being brought forward as logistics shift from air to sea due to high oil prices. These moving parts will give Intel a short-term boost.

Wells Fargo analyst David Wong said that PC market demand remained weak through March, but there was a pickup from contract equipment manufacturers. Translation: The inventory of Sandy Bridge desktop and notebook PCs was being replenished.

Richard said:

Beyond the near-term bounce in demand, we believe PC unit growth forecasts are too high in CY11 as consumers increasingly opt to purchase a tablet or smartphone rather than a PC.

Those consumer preferences were also noted in both PC market share scorecards from both IDC and Gartner. Richard argued that Intel has missed the mobile boat.

We believe the departure of SVP and GM of the Ultra Mobility Group, Anand Chandrasekher, after 24 years at Intel is clear evidence that Intel has mis-executed in smartphones. This is on the heels of Nokia dropping Intel's MeeGo, MSFT embracing ARM, and Intel becoming a 3rd tier choice for Android applications developers. We believe that it may already be too late for Intel in the 4th wave of computing as that ship appears to have sailed and Intel's PC legacy acts as an anchor.

Given those worries, analysts like Barclays Capital Tim Luke will want to hear a lot about Intel's smartphone strategy. The company bought Infineon. Now what will it do with Infineon. "We believe investors will be increasingly focused on the direction of the company’s strategy in the smartphone arena," said Luke.

Related:

Can Intel make an Atom tablet play? Jury is out

Topics: Processors, Hardware, Intel, Mobility, Smartphones

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11 comments
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  • RE: Intel: Messy quarter ahead, PC worries abound

    Looks like the tip of the saturation point for computing in the developed world at least.

    We are now at a point where a 10 year old PC is quite capable of handling the tasks that most people perform even if it is not the quickest thing in the world. Many households have multiple computers.

    Until the next revolutionary innovation (rather than evolutionary) I think we can expect a flat-growth replacement market for PCs and laptops.
    SlithyTove
  • Monkey Boy Can't Dance

    <ul><i>We believe that it may already be too late for Intel in the 4th wave of computing as that ship appears to have sailed and Intel?s PC legacy acts as an anchor.</i></ul><p>
    Fortunately, none of that applies to Microsoft.

    Now <i>you</i> tell one.
    Robert Hahn
  • Tablets and PCs

    Mr. Richards argues that "consumers [are] increasingly opt[ing] to purchase a tablet or smartphone rather than a PC." I'm not seeing that; the people I know who have a tablet use it in addition to a PC. Buy a new iPad, and you can't do anything with it until you connect it to a computer.
    ParrotHead_FL
    • Got one, thanks

      @ParrotHead_FL
      Hardly anyone considers a tablet and then thinks, "Oh, I'll have to buy a computer, too." The reason PC sales are declining is that practically everyone already has one. Even ten year old computers are fast enough to do what most people use them for.
      Robert Hahn
      • RE: Intel: Messy quarter ahead, PC worries abound

        @Robert Hahn Ten-year-old cars are good enough for what most people use them for, too, but they still buy new ones.
        ParrotHead_FL
  • RE: Intel: Messy quarter ahead, PC worries abound

    Add to your list that Intel not only had messy Sandy Bridge issues, but also have not managed them well, because the current chipset seems to maintain the Sandy Bridge name - which will cause a huge puzzlement for consumers regarding whether to buy Intel or AMD. You'd think they were smarter than THAT!
    Willnott
    • RE: Intel: Messy quarter ahead, PC worries abound

      @Willnott Well, considering that Intel dragging its butt on next-generation technologies like SATA III is what CAUSED this problem (6 x SATA III ports would have been flawless, costing pennies per chipset) I have no sympathy for their error.

      Besides, AMD 990 has, IIRC, 6 SATA III ports, and native USB 3.0- something else Intel doesn't have.
      R220
  • RE: Intel: Messy quarter ahead, PC worries abound

    Well all the usual genius "Wall Street Analysts" were once-again proven to be WRONG. Intel's actual financial results were terrific, well ABOVE what the genius analysts were expecting. Nice job Intel, keep up the good work!
    BMaytum
  • RE: Intel: Messy quarter ahead, PC worries abound

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    seolair
  • RE: Intel: Messy quarter ahead, PC worries abound

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    mldriggs
  • RE: Intel: Messy quarter ahead, PC worries abound

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