Feeds

Intel fingers slow PC sales for rough Q1

AMD forgotten

Top 5 reasons to deploy VMware with Tegile

Intel, as expected, blamed a weak PC market for a poor set of first quarter results. Although, such an excuse remains tough to stomach given rival AMD's smashing quarter last week.

Intel's first quarter revenue slipped 5 per cent year-over-year to $8.9bn. That drop, however, was actually a bright spot during the difficult period.

Intel's profit of $1.3bn, for example, marked a 38 per cent slide from last year's first quarter. In addition, its earning per share figure of 23 cents was a 34 per cent reduction year-over-year. In total, Intel posted its worst quarter since the dot-com bust era.

"We believe PC growth rates have moderated over the course of the past few quarters, leading to slower chip-level inventory reductions at our customers and affecting our revenue in the first half of the year," said Intel President and CEO Paul Otellini.

Wall Street doesn't appear to be buying Otellini's take on the status of Intel's business. A Merrill Lynch analyst earlier this month urged Intel to consider whether or not Otellini is really the right man to revive the firm, which has fallen behind AMD on desktop and server processor performance.

AMD last week reported an increase in notebook, desktop and server processor sales, while posting a more than 70 per cent rise in overall revenue. Like Intel, AMD did point to the PC processor market as its slowest segment.

During a conference call with analysts, Intel executives admitted that AMD gained more market share than they had expected during the second half of 2005. They, however, denied that AMD had the same impact during the first quarter.

"The first quarter was a noticeable change from what we saw in the back half of '05," said Intel CFO Andy Bryant.

The lackluster PC market has forced Intel to "adapt to lower expectations" by cutting costs and initiating a hiring freeze.

In addition, Otellini vowed to examine ways to "significantly increase" the company's efficiency in 2007.

Turning back to the first quarter, Intel said, "First-quarter gross margin was 55.1 percent, versus a January expectation of 59 percent, plus or minus a couple of points. Gross margin was impacted by lower microprocessor revenue and higher inventory write-downs."

Overall, Intel's processor, chipset, motherboard and flash memory sales declined during the quarter. Sales were down in all regions except Japan.

Intel expects second quarter revenue to come in between $8.0bn and $8.6bn, which would be below typical patterns.

"The company believes PC growth rates have moderated in recent quarters, resulting in above-normal customer inventory levels that are limiting demand in the short term," Intel said.

Intel has put itself in a difficult position by pre-announcing new desktop and server chips that will arrive in the second half of this year. The new products will be built around a much-improved architecture. Customers appear to be waiting for this upcoming product and defecting to AMD at the same time. ®

Beginner's guide to SSL certificates

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple's iPhone 6 first-day sales are MEANINGLESS, mutters analyst
Big weekend queues only represent fruity firm's supply
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Bill Gates, drugs and the internet: Top 10 Larry Ellison quotes
'I certainly never expected to become rich ... this is surreal'
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.