Intel Says PC Sales Have 'Bottomed Out' - InformationWeek

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Infrastructure // PC & Servers

Intel Says PC Sales Have 'Bottomed Out'

Worldwide PC shipments have been hammered in the economic recession, with shipments expected to fall by 4.5% this year to 282 million units.

Chipmaker Intel on Tuesday reported double-digit drops in revenue and profits in the first quarter of the year, but said it believes PC sales have "bottomed out" and the industry is returning to normalcy.

Intel reported that net income plummeted 55% from the same period a year ago to $647 million, as revenue fell 26% to $7.1 billion. Gross margin fell to 45.6% from 53.1% in the fourth quarter, primarily because of factory underutilization in the economic recession. The company also has begun retooling some factories for its next-generation processors.

Despite the grim financial report, Intel president and chief executive Paul Otellini said the worse appears to be over.

"We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," Otellini said in a statement.

Worldwide PC shipments have been hammered in the recession. Shipments this year are expected to fall by 4.5% this year to 282 million units, according to IDC. The slide started in the fourth quarter of last year when sales fell 1.9%, the first decline following five years of almost uninterrupted double-digit growth.

Nevertheless, Intel did not provide a revenue outlook for the second quarter, citing continued economic uncertainty. Internally, Intel is planning for revenue about flat to the first quarter. Intel expects gross margin percentage to be in the mid-40s.

Sales of microprocessors in the first quarter were down in general, and the average selling price was about flat from the fourth quarter. Revenue from Intel's Atom processors and chipsets was down 27% from the fourth quarter to $219, an indication that the growing market for mini-laptops, or netbooks, may have slowed in the first quarter. The Atom is the dominant platform for netbooks.

Intel has managed to increase market share in the economic downturn. At the end of the fourth quarter of last year, Intel accounted for 81.8% of worldwide processor revenue, up 3.4 percentage points from 78.4% in the fourth quarter of 2007, according to iSuppli.

Rival Advanced Micro Devices has seen its share fall. At the end of the fourth quarter last year, AMD accounted for 10.6% of global revenue, a drop of 3.5% from the 14.1% share it held in the same period of 2007.

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