Hiya NW,
Perhaps things are not as bad as they seem.
--
Server Business Better Than Expected, Intel CFO Says
Inventories still tight; Q1 meeting expectations so far, says Intel's Bryant
By Edward F. Moltzen, CRN
New York
6:50 PM EST Thurs., Mar. 07, 2002
Gartner Analyst: Web Services No ‘Silver Bullet’
IBM Wins $500 Million Nestle Deal
Network Associates Drops Plan To Sell PGP
Intel is seeing brisker-than-expected server sales this quarter, but otherwise business is tracking almost exactly according to expectations, the chip maker's chief financial officer told analysts Thursday.
Andy Bryant, Intel's CFO, also said the company's communications and wireless businesses remain soft, while desktop processors remain in tighter supply than the company would like.
"We've seen some stronger demand in the server space than we anticipated going into the quarter," Bryant said, after the company released its formal mid-quarter update on how its business is tracking.
"If I were speculating, I'd say I think we're still making inroads in architectural share--particularly in eight-way [systems] and below," Bryant said. "What it really comes down [to] is, in the time of four [prior] quarters of economic stress, the price-performance starts to resonate with more people, and I think we're starting to see the benefits of that."
Intel said the company expects to see sales of between $6.6 billion and $6.9 billion for the first quarter, compared with the range of $6.4 billion to $7 billion it said it expected when it spoke with analysts on Jan. 15. Bryant also said gross margin percentage is tracking along with expectations and may come in slightly above the midpoint of expectations.
While Intel experienced some tight supply of its processors during the last quarter of 2001, Bryant said, in response to questions, that supply constraints haven't abated greatly since then.
"We expected as we began the quarter [that] we'd see supply come into balance," Bryant said. "By the inventory in the channel ... it's not obvious there's been much inventory build in the channel. I still need a whole lot more inventory than I've got."
and
Intel's revenue outlook stable
By: Michael Kanellos
3/7/02 3:30 PM
Source: News.com
Intel narrowed its revenue forecast for the first quarter Thursday, although it doesn't appear that the economy or the chip business is turning around yet.
The Santa Clara, Calif.-based chipmaker said that revenue for the first quarter would come to between $6.6 billion and $6.9 billion, within the range of its earlier prediction of $6.4 billion to $7 billion. Gross margins are expected to come in around 50 percent, give or take a few points, although the company indicated that the final figure could come in above 50 percent.
Microprocessor sales will follow a seasonal pattern, the company added, meaning sales will slightly dip. Meanwhile, the company's communications businesses remain weak.
The biggest surprise for the quarter is that server sales are going better than anticipated, said Andy Bryant, the company's chief financial officer. Manufacturing costs have also declined slightly more than expected during the quarter. Nonetheless, the economic outlook remains flat, he said.
"We've seen no evidence of an economic recovery in our business," Bryant said.
Intel will officially publish its financial results for the quarter April 16.
The predictions were largely in line with previous statements. Intel CEO Craig Barrett said last week at the Intel Developer Forum in San Francisco that the market had begun to once again show signs of life.
"I can't tell you when the recession will end, but I can tell you that the computer market has stabilized, albeit at a lower level than last year," Barrett said at the four-day convention used to highlight the chipmaker's technological advances."You might expect the computer sector to recover faster than the communications sector."
Still, the big question going forward is when corporate buying will resume. U.S. corporations typically buy replacement PCs every three years. The last large upgrade cycle took place in 1998 and early 1999, so one is theoretically on the way. The economy, though, combined with the fact that many workers may not need more power on their desktops just yet, has stalled the latest cycle, analysts have said.
"It doesn't seem to be changing (the buying cycle), at least right now," Bryant said. Desktops aside, he added that the pickup in the server business could be coming at the expense of companies that manufacture servers with RISC chips, such as Sun Microsystems. Sun, though, on Thursday said that its guidance for the quarter remains unchanged.
"After four quarters of economic stress, the price/performance of the Intel architecture begins to resonate with people," Bryant said. "The server business is growing a little faster than we expected it to at the beginning of the quarter." |
