Intel’s quarterly results were particularly closely scrutinized this year, not only because the chip giant is such an important bellwether for the hi-tech sector, but because it was one of the first of a series of companies to report, and is likely to set some patterns. While nearly all wireless firms will report a bad quarter, analysts are mainly interested to see whether this will be the low point of the downturn, and according to Intel, it will – the PC/notebook market, at least, has bottomed out, according to CEO Paul Otellini, sending positive signals to the whole industry.
However, the first quarter was not pretty for Intel, although it was less bad than many had expected. Sales were $7.1bn, slightly ahead of Wall Street forecasts and in line with Intel’s own internal estimates. However, this was a 26% year-on-year fall and a 13% sequential drop. Net income was $647m or 11 cents per share, down 55% on last year and a huge 175% on the last quarter of 2008.
“We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns,” said Otellini in a statement.
Atom, the key microprocessor for netbooks and, in future, MIDs and smartphones, saw a 27% sequential revenue decline to $219m.
Intel said economic conditions were still tough and there was limited visibility, and so did not provide a Q2 revenue guidance, beyond saying it was planning for this to be “essentially flat”. The company still plans to spend between $10.4 billion and $10.6 billion on R&D and merger and acquisitions and expects capital spending to be down slightly from 2008.
Otellini also gave a glimpse of Intel’s next strategy to dominate the portable PC market, which is increasingly breaking into many new formats, from netbooks to MIDs to tablets. It is planning a ‘consumer ultra-low voltage’ (CULV) processor, which will power ultrathin, low cost laptops with greater functionality than netbooks, but which could also come with embedded wireless (Wi-Fi of course, but also WiMAX and/or 3G) and be sold through carrier channels.
Described by some as ‘MacBook Air for the masses’, Intel feels CULV-based products could redress some of the swing towards very low margin products. They will use standard Intel chips, such as Core, rather than Atom, which will be pushed down into the smaller, ultra-mobile markets, taking on ARM in the low power space. All this shows Intel increasingly spreading its tentacles across as many formats and mobile notebook variations as it can, to stave off the challenge from ARM-based processors.