Intel says signs point to revived corporate demand
TAIPEI, April 22 (Reuters) - A top executive of semiconductor leader Intel Corp predicted an impending revival of corporate demand for computers on Monday, saying past patterns and demanding new applications pointed to an upturn.
Though individual consumers have started buying new gadgets again as economies climb out of a global economic downturn, corporate customers have been hesitant to begin spending, hitting first-quarter profits of many computer makers.
Louis Burns, the head of Intel's personal computer chip operations, told reporters the company's past experience showed corporate computers bought to cope with year 2000 date issues were due for an upgrade.
``The upgrade cycle in corporates has been about every three, three and half years. There was a big influx in the fall of 1999 in front of Y2K,'' Burns said on the sidelines of the Intel's developers' conference in Taipei.
``There's a reasonable number of applications in the marketplace with capabilities that need more horsepower than they bought in the fall of 1999,'' said Burns, whose title is general manager of Intel's desktop platforms group. ``There certainly is a need, based on historical perspective.''
The world's biggest computer maker, International Business Machines Corp (NYSE:IBM - news), posted its sharpest drop in earnings since 1993 last week, citing weak corporate spending on technology.
However, Intel, the largest semiconductor maker, reported first-quarter earnings that were down just slightly from a year ago, suggesting its profit declines are nearing an end.
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Burns said a comeback in companies' technology spending would ultimately depend on the economy. ``What we do see is that those that are buying, are buying really rich machines because they know they've got to last three years or longer,'' he said.
He said there are about 450 million personal computers worldwide with microprocessors running at 700 megahertz or below.
Those would be ill-equipped to handle the latest Windows XP operating system and Office software from Microsoft (NasdaqNM:MSFT - news), plus security and anti-virus software all at the same time, as most companies require.
``Pretty quick you take a machine down pretty hard and the end-users will not be real happy with that performance,'' he said. Intel's most powerful processors run as fast as 2.4 gigahertz, more than three times quicker than a 700 megahertz system.
On Friday, Intel shares lost $0.35, or 1.15 percent, to $30.1, while the Nasdaq composite index (^IXIC - news) slipped 0.31 percent.
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