Intel's strong second quarter fuels hope that the global recession that has hammered the IT industry may be easing. Excluding a massive fine from the European Union, Intel reports a $1 billion profit on $8 billion in revenue. Intel CEO Paul Otellini echoes his counterparts from Dell and Microsoft by saying he expects enterprise purchases of servers and consumer purchases of PCs to pick up after the recession forced spending cuts. However, purchases of business PCs are expected remain stagnant.
Three months after CEO Paul Otellini
announced that the PC
market had bottomed out,
Intel's latest quarterly numbers indicate that the
industry may be stabilizing.
July 14 posted strong numbers in the second quarter, including $8
billion in revenue and a $1 billion profit. However, when the European
billion fine for antitrust violations
was factored in, Intel's profit swung
to a $398 million loss. The EC levied in the fine in May, and Intel has since
Analysts were encouraged by what they saw from the chip maker.
"They are an early indicator of where the industry is going, and it
seems to be going well," Gartner analyst Leslie Fiering said in an
interview after Intel's conference call with analysts and journalists.
Echoing what his counterparts at other companies have said throughout the
day, Otellini observed that the global recession had forced businesses and
consumers alike to hold back on buying new systems. As the recession begins to
ebb, Otellini said he expects purchasing-at least in the consumer market-to
begin to return to normal seasonal patterns in the second half.
The enterprise market for servers also could continue to grow, though Intel
executives said demand for businesses PCs will remain stagnant.
During his meeting with analysts July 14, Dell CEO
Michael Dell said businesses
were extending the normal refresh cycles
for their PCs, notebooks, servers
and storage devices for a year or longer, and that eventually they were going
to have to replace the hardware.
Similarly, Microsoft CEO Steve Ballmer
suggested in an address at his company's Worldwide Partner Conference in New
Orleans that Microsoft's upcoming Windows 7 operating
system also could help convince businesses to refresh
"Even if you take the assumption that [the economy] won't turn around
for a long period of time, every minute of every day we're building a pent-up
demand for IT," Ballmer said.