Analysts Stay Cautious
Roger Kay, an analyst with Endpoint Technologies Associates, said Intel's results were positive, and agreed with Otellini that the PC market seems to be turning around and that seasonal buying patterns would probably resume, which would mean that sales in the second quarter would be about the same as the first, with the third and fourth quarters showing increases. Kay also pointed out that even with shipments at 80 percent of what would be normal, "that's still a lot of equipment." There appears to be a pickup in orders from March in April, "and what we're seeing seems to be something of a revival," Kay said. "But we have to be careful about that and [whether to call it] a recovery."Kay, who in his years with research company IDC would forecast the PC market, also said Otellini was smart in not giving more specific guidance for the rest of the year, given the volatile and fragile nature of the economy. "Forecasting gets real good in stable times," Kay said. "The moment everything starts to break up, the forecasting gets very difficult. There's an issue of how good [forecasting] can [be], and in this economy, visibility is quite low." Not everyone was convinced that the market is returning to a seasonable sales picture. Hans Mosesmann, an analyst with Raymond James Equity Research, said it was no surprise that Otellini would predict such a return. However, "we would argue that Intel is not the best source in terms of predicting demand several quarters out," Mosesmann said, adding that "Intel is executing quite well in a tough environment." Another Raymond James analyst, Brian Alexander, said in a report that Intel's numbers give some insight into what to expect from Hewlett-Packard and Dell, the top two global PC makers. The two vendors have a tight financial relationship with Intel: HP and Dell represent 20 percent and 18 percent of Intel's net revenue, respectively. Given the numbers Intel announced, Alexander wrote that he expects HP's PC revenues to decline 10 percent over the fourth quarter, and Dell's to drop 5 to 10 percent. Alexander also said much of Intel's expected seasonal bump could come from the fact that vendors will need to restock their shelves rather than from user demand. "Overall, while Intel's results are encouraging, we believe that it may be driven by a replenishment of lean inventories in the channel, as end-market demand is soft, although better than earlier in the year," Alexander wrote.
There also are some hopeful signs, he said. Microsoft's rollout of Windows 7-expected sometime in summer 2009-also could give a bump to PC sales, and the netbook market could come in around the $20 million range.