Intel Boosts Outlook on Improving Demand

Posted by: Cliff Edwards on August 28, 2009

Dell, Hewlett-Packard Co. and other customers of Intel remain cautious about end-user demand, but the chipmaker says things are finally looking up.

Santa Clara (Calif.)-based Intel on Aug. 28 said third-quarter revenues could be half a billion dollars higher than its previous mid-range forecast of $8.5 billion. The company cited stronger demand for its microprocessors and chip packages that accompany them.

To be sure, the new revenue guidance still shaves more than $1 billion off the $10.2 billion in sales Intel logged in the year-ago comparable period. But the announcement will reinforce investor views that the tech sector has reached bottom and should begin recovering through 2010.

It came a day after Dell, the No. 2 pc vendor behind HP, reported better-than-expected quarterly results. Though Dell’s profits continued their slide for the fourth-consecutive quarter, CFO Brian Gladden said he was cautiously optimistic that the pc market is beginning to recover, echoing reports from HP that things have stabilized.

Intel also appears to be confirming Dell’s comments on Aug. 27 that back-to-school spending on new pc products is going well. There had been some concern that consumers were continuing to buckle down in July and August, after many of the nation’s largest retailers reported weak sales of clothing and other back-to-school items.

The big wild card, of course, is whether pc makers are building up inventory that could sit unsold on shelves if consumer spending suddenly weakens again. PC makers have said they do not expect corporate spending on computers and servers to rise in any significant way until next year.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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