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Intel says the worst of the downturn is over

Paul Kunert

The PC market has bottomed out in Q1 and the industry is returning to "normal seasonal patterns" reckons Intel president and CEO Paul Ottelini, however the company was not confident enough to provide revenue guidance for this quarter.

This optimistic view was aired as the chip giant revealed first quarter revenues of $7.1bn, a drop of 26% year-on-year and 13% sequentially, as profits fell 55% on the same period in 2008 to $647m, but rose quarter-on-quarter by 176%.

"We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," said Intel's head honcho Ottelini.

Adding a little more context to those comments, Stacy Smith, chief financial officer at Intel, said "We are still sitting in a fragile global economic environment, but we have got three or four months of fairly good trending."

The corporate enterprise market was still experiencing some sluggishness he added.

"What we are seeing is that enterprise budgets are locked down pretty tight and CIOs are going to let their fleets age a bit until they get a little more clarity on what the economy looks like," said Smith.

In the first quarter, total CPU shipments were flat sequentially as were ASPs but Atom processor sales, chips used in netbooks saw revenues fall 27% on last quarter to $219m.

Intel, like all vendors, has closely scrutinised inventory to manage its cost base more effectively and reduced stock levels during the three months by $700m.

Other highlights included restructuring and asset impairment charges of $74m, lower than the $160m expected and a net loss of $18m from equity investments and interest, again lower than initial forecasts.

Despite Intel's positive prognosis on the changing fortunes of the market, it refused to provide revenue guidance for Q2, "due to economic uncertainty and limited visibility".

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