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October 15, 2009

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Intel results indicate a faster recovery

INTEL Corp has been asserting for months that the personal computer business is rebounding from its deepest slump in nearly a decade. Its stock jumped late on Tuesday on signs things are picking up faster than expected, despite a few lingering trouble spots.

Intel reported after the market closed that its profit and sales both dipped 8 percent in the July-September period as spending by corporations remained weak, a trend that has dragged on throughout the recession and probably won't ease until next year.

The price for Intel's chips also fell. One reason is that netbooks have caught on but aren't big money makers. Another is that PC makers have slashed prices for full-sized computers, and aren't willing to pay as much for the chips that go into them.

The results easily surpassed Wall Street's forecasts, however, and Intel's guidance for the October-December quarter of US$9.7 billion to US$10.5 billion in sales also topped projections.

As the first major technology company to report third-quarter earnings, Intel's numbers lend insight into the strength or weakness of PC makers' demand for new chips. What the figures don't necessarily show, though, is whether PC companies are stocking up on chips to replenish low supplies, or whether they expect especially brisk sales of computers. That will begin to play out in the coming weeks, as the holiday season gets under way and a new edition of Windows is released on October 22.

Intel has been more optimistic than even some of its biggest customers. Hewlett-Packard Co and Dell Inc, the top PC makers, have been reluctant to call a bottom in the PC market, as CEO Paul Otellini did in April.

Intel's net income was US$1.9 billion, or 33 cents per share, down from US$2 billion, or 35 cents a share, a year ago. Sales totaled US$9.4 billion.



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