Feeds

Intel fingers slow PC sales for rough Q1

AMD forgotten

Remote control for virtualized desktops

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. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
UK.gov pushes for SWIFT ACTION against nuisance calls, threatens £500k fines
DCMS seeks lowering of legal threshold to fight rogue firms
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
Hungary's internet tax cannot be allowed to set a precedent, says EC
More protests planned against giga-tariff for Tuesday evening
US court SHUTS DOWN 'scammers posing as Microsoft, Facebook support staff'
Netizens allegedly duped into paying for bogus tech advice
ISPs handbagged: BLOCK knock-off sites, rules beak
Historic trademark victory, but sunset clause applies to future blocks
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
How to simplify SSL certificate management
Simple steps to take control of SSL certificates across the enterprise, and recommendations centralizing certificate management throughout their lifecycle.