Feeds

Intel fingers slow PC sales for rough Q1

AMD forgotten

High performance access to file storage

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. ®

High performance access to file storage

More from The Register

next story
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.