Intel’s second quarter results last week indicate that the PC market recovery has begun, the leading industry analyst Gartner has claimed.
Last week, Intel reported that its second quarter 2003 profits were double those of a year earlier. Intel posted a net quarterly income of US$896m on revenues of US$6.8bn.
Intel’s overall computing revenue rose to US$620m, a 12pc gain on the previous year. According to Gartner analyst Martin Reynolds, Intel’s computing product revenue normally declines from first quarter to second quarter, but held flat this year. “This stronger-than-expected result offset softness in Intel’s other businesses,” Reynolds said.
Reynolds argued that Intel’s success also comes from arch rival AMD’s weaknesses. The day after Intel posted its results, AMD reported a net loss of US$140m on US$645m in sales, a decrease of 10pc compared to the first quarter of this year.
“In addition, the weaker dollar makes PCs more affordable overseas and drives growth,” Reynolds continued. “Overall, though, Intel’s jump suggests a nascent recovery in the PC market, consistent with Gartner’s forecast of 6.6pc unit growth for 2003. This growth figure requires a relatively strong second half in 2003, which in turn depends on the strength of the US business market.”
Intel also reiterated its intent to deliver wireless silicon designed to replace broadband wiring to homes, a move Reynolds welcomed. “In Intel’s hands, such an initiative has two key factors for success. The first is access to massive financial and intellectual capital. The second is that Intel is doing this not just for wireless but to advance connectivity for PCs. Anything that causes the PC market to grow brings handsome returns to Intel’s coffers.
“For buyers, a recovery in the PC market will result in less aggressive pricing from suppliers as demand increases. However, the difference will be measured in tens of dollars, not hundreds of dollars. Enterprises don’t need to adjust spending plans,” Reynolds concluded.
By John Kennedy
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