Otellini says IT economy no longer dying
As Intel profits soar 288%
According to Intel president and CEO Paul Otellini, his "industry is nearly fully recovered" - and if his company's financial performance in the first quarter of 2010 is any indication, he may be right.
Intel's net income for the quarter was $2.4bn - and while that was a mere 7 per cent improvement over the traditionally strong fourth quarter of 2009, it was a full 288 per cent better than the dismal $629m performance during the first quarter of last year.
As might be guessed from those figures, revenue increased as well, totalling $10.3bn in the first quarter of this year, an improvement of 44 per cent from $7.1bn in the same quarter in 2009.
Intel CFO Stacy Smith - who joined Otellini on a conference call with analysts and reporters on Tuesday - expressed pleasant surprise with what he called "better than expected financials," adding that "the strength of our business surprised us."
Otellini continued the happy talk. After discussing the new revenue record set by Intel's mobile business - he called the move to mobility a "megatrend" - Otellini added that "We're also seeing signs of corporate demand returning, which we believe will continue to improve, given the age of the corporate PC fleet and the compelling ROI that our new generation of server [processors] presents."
He did offer a note of caution, however: "You're starting to see some corporate PC purchases reemerge, [but] I'm still not going to go out on a limb - and our customers certainly aren't going to go out on a limb - and say that there's a corporate refresh 'snapback' coming."
His view is tempered by a pragmatic view of good ol' ROI: "I think what we see this cycle is that people are buying thing to replace older machines because it's just cheaper."
And so the industry may have recovered, but that "snapback" of growth is still on the horizon. One measure, as Smith pointed out, is "the number of employees was approximately flat in the first quarter."
Revenue may be up and profits may be up, but hiring isn't - which is not good news for those 5,000 to 6,000 Intel employees targeted for layoffs in early 2009.
"This is a great way to begin 2010," Otellini said. A great way to end the year would be to swell not only profits, but also employee rolls. ®