An Article I saw online this morning that I wanted to share by the AP:
SAN FRANCISCO: Investors don’t seem to totally buy Intel Corp’s proclamation that slumping personal computer sales have ‘bottomed out.’
The chipmaker posted first-quarter profit Tuesday of $647 million, or 11 cents per share, that sailed past Wall Street’s estimates. Analysts polled by Thomson Reuters were expecting three cents per share. Sales of $7.1 billion also beat forecasts, even though both sales and profit were way down over last year, 26 percent and 55 percent, respectively.
The problem was sketchy guidance, which stirred fears that the tech turnaround Intel sees might not happen as fast as some investors hope. Intel’s stock fell 81 cents, or 5.1 percent, to $15.20 in after-hours trading, after Intel posted its numbers.
Intel is predicting that revenue will stay flat from the first to second quarter. That’s roughly in line with the $7.01 billion analysts were expecting for the April-June period. Some analysts said they were impressed with the prediction, considering the troubled state of the economy and the fact that the first and second quarters are typically the roughest for chipmakers. Back-to-school and holidays are usually boom times.
In a broad sense, Intel’s outlook was relatively upbeat, given the uncertainty about the length and depths of the recession. As the world’s largest semiconductor company, Intel’s results help gauge demand for personal computers, and are a proxy for the health of overall technology spending.
When times are good, consumers and businesses buy more PCs, which leads PC makers to buy more of Intel’s chips. When times are tight, PC makers clamp down, and Intel’s sales fall. This recession is bearing that out: Computer sales fell slightly in the fourth quarter of 2008, according to market tracker IDC, the worst performance since 2002.
Intel’s CEO, Paul Otellini, said Tuesday that that trend appears to be reversing, and that Intel believes “PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns.”
Intel’s report was notable because Intel is first technology company to report earnings for the first three months of 2009.
Intel owns about 80 percent of the world’s PC microprocessor market, and has been stealing share from smaller rival Advanced Micro Devices Inc with the Atom chip. Atom is Intel’s first microprocessor for ‘netbooks,’ which are mini-laptops that do less than regular laptops, but are very popular because they also cost less.
Intel said its profits were helped by a tax rate that was much lower than expected, one percent instead of the 27 percent that was forecast. The lower rate increased earnings per share by about two cents.
