Intel: The bottom is in for PC demand

Intel: The bottom is in for PC demand

Summary: updated: Intel reported a first quarter profit of $647 million, or 11 cents per share, on revenue of $7.1 billion, beating Wall Street's estimates and suggesting that the sluggish PC industry may have finally bottomed out.

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updated: Intel reported a first quarter profit of $647 million, or 11 cents per share, on revenue of $7.1 billion, beating Wall Street's estimates and suggesting that the sluggish PC industry may have finally bottomed out. Analysts had been expecting earnings of two cents on revenue of $6.98 billion. (Statement)

In a statement, Intel president and CEO Paul Otellini offered rays of hope that the worst may be behind us. He said:

We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns. Intel has adapted well to the current economic environment and we’re benefiting from disciplined execution and agility. We’re delivering a product portfolio that meets the needs of the changing market, spanning affordable computing to high-performance, energy-efficient computing.

Still, the numbers represent big declines from the previous year as the economy has taken its toll on Intel and other technology bellweathers. Revenue was down 26 percent from the same quarter a year ago. Net income and EPS were down from the year-ago quarter by 55 percent and 56 percent, respectively. But that came as no big surprise.

Despite the stronger-than-expected quarter, the company did not issue a forecast for the second quarter but said that, for internal purposes, the company is planning for the revenue to be flat. At the end of the quarter, the company launched the new Xeon chips, calling it the biggest announcement since the release of the Pentium Pro chip in 1995. In recent weeks, the chip has been at the heart of big announcements by HP, Cisco, Sun and others.

On a call with analysts today, Otellini said the response to Nehlaem has been "remarkable" and that the company should ship its 1 millionth chip this week. He also noted that the consumer segment "held up much better than the enterprise," especially in notebooks.

Also see: Intel: Economy hurts but there are bright spots

The company also said that revenue from the Atom microprocessors and chipsets was $219 million for the quarter, down 27 percent sequentially. At an investor conference in February, Otellini said that he didn't see netbooks - which use the Atom chips - cannibalizing notebooks. Instead, he said, the growth of netbooks will take off in a similar way that cell phones are now sold - subsidized by the service provider and tied to a contract to get them in hands of users.

His best guess is that one-third of the volume will move that way this year and that it will grow to one-half next year.

Shares of Intel were up slightly in regular trading, closing at $16.01. Shares fell in after-hours trading, down more than 5 percent.

Topics: Processors, Banking, Enterprise Software, Hardware, Intel, Networking

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6 comments
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  • In other words

    They are in the same boat everyone else is in. You could have made the post a lot shorter. ;-)
    No_Ax_to_Grind
    • Maybe.... Maybe not:)

      http://www.appleinsider.com/articles/09/04/15/apple_selling_22_iphon
      es_28_macs_per_store_each_day.html

      Pagan jim


      James Quinn
      • Really?

        Is there another source to this as if this was the case then wouldn't the Apple's market share be rocketing up? Or are sales of PCs matching this?

        I think the main reason that demand for PCs has dropped off is going to be due to business. Companies are going to be a lot more reluctant to do a hardware refresh at the moment. I know my company is.
        Average-IT-Guy
        • Where have you been?

          Aople's market share over the past couple years has been going up:)

          Pagan jim
          James Quinn
    • In other words...

      Intel is thanking the gods that Apple transitioned to Intel.
      i8thecat
  • RE: Intel: The bottom is in for PC demand

    Does this mean that we may see the NY stock exchange rally on the back of the NAZDAC or does it mean that the stock market will follow its latest trend. It seems to me that the world economic situation will only make headway when we renew confidence in the stock market and it seems that IT stocks are the way to go.
    acunning@...