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Intel cites economic 'momentum,' posts strong Q3

Agam Shah | Oct. 15, 2009
Revenue dipped from the same period last year, but beat analyst forecasts and exceeded last quarter's figure

According to iSuppli's preliminary estimates Tuesday, global PC shipments totaled 73.8 million units in the third quarter, up 9.8 per cent from 67.2 million in the second quarter this year. However, shipments declined by 6.7 per cent compared to the same quarter last year. Intel chips go into the majority of those consumer PCs.

Enterprise spending was weak, Otellini said on the call, with companies shutting down spending on client hardware. Businesses haven't refreshed their PCs in four to five years now and older PCs cost more to maintain, according to Otellini. A refresh cycle could come next year, he said.

Microsoft's upcoming Windows 7 OS could also be a reason to buy new PCs, though that could take time, Otellini said. Corporations need a qualification period to adopt the new OS in their environment. The evaluation could happen this year with system purchases beginning in 2010, Otellini said.

Spending on servers fared better, with companies looking to swap out older servers for better-performing systems. Shipments of Nehalem-based chips were strong in data centers as companies looked to consolidate servers and cut energy costs, Otellini said. Nehalem chips could be a profit driver for Intel as companies open up their wallets to upgrade hardware, Otellini said. Revenue for the digital enterprise group -- responsible for server and desktop chips -- grew by about 14 per cent sequentially.

The company's next major server chip, the eight-core Nehalem-EX, will ship by the end of this year, Otellini said. The chip could help Intel encroach on the fault-tolerant server market, against chips including its own Itanium, Sun Sparc and IBM Power. Margins in this area are good but the "bad part" is that volumes tend to be lower, Otellini said.


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