(Posted by Clare Baldwin)
New data from research group IDC shows Advanced Micro Devices gained on arch rival Intel in the first quarter PC microprocessor market. There is of course still a huge gap between the two — Intel earned a 77.3 percent unit global market share, a loss of 4.7 percent, while AMD held 22.3 percent, a gain of 4.6 percent — but it’s all the more interesting given the intrigue swirling around the two companies.
Intel’s first-quarter results may have topped Wall Street’s expectations, but it was CEO Paul Otellini’s use of the B-word–as in “bottom”– that seemed to generate the most excitement. Although shares fell when the world’s top chipmaker chose not to provide a formal forecast for the current quarter, Otellini’s words on Intel’s conference call should provide some much-needed cheer for the IT sector:******”In terms of demand, we saw a few important trends play out this quarter. First, we are seeing signs that a bottom in the PC market segment has been reached. I believe the worst is now behind us from an inventory correction and demand level adjustment perspective. We saw order patterns strengthen throughout the quarter. Desktop sales appear to have hit bottom first and have followed a normal — more normal — pattern since early February.”******”In terms of end-user consumption, the consumer segment has held up much better than the enterprise. This is particularly true in consumer notebooks, which continue to be the volume driver in this segment. Netbook sales continue to grow as anticipated, and are clearly incremental volume for us in a difficult market.”******He continued: “We expect business conditions in Q2 to mirror those of Q1, with some gradual recovering of demand and replenishment of inventories occurring as the industry sees increasing signs of stabilization and a return to more normal seasonal trends.”******Of course, no one is yet expecting a full bounceback. The plunge in PC demand was too swift and precipitous for that sort of talk.******When asked about a possible timeline for recovery, Chief Financial Officer Stacy Smith told Reuters:******”Part of the lackof visibility going forward is what does the shape of this look like … over the next few quarters. The first step was to work through the excess inventory that was out there. I think that happened, it actually happened a bit more quickly then i was anticipating, that’s why my gross margin [45.6 percent} is a little better than what we forecast.”******”We’re watching carefully to see what the shape of this looks like as we get into the second half.”******The company forecast continued weakness in the enterprise market, which some say could be a roadblock to recovery.******”From the standpoint of profitability, the quicker enterprise recovers, the better,” said David Kanter, an analyst with Real World Technologies. “But from the standpoint of volume they are both are pretty important.”
The rise in popularity of netbooks last year helped boost Intel’s already dominant position in the global microprocessor market, according to fresh data from iSuppli. The research group said Intel gained share in every quarter of 2008, partly due to the success of its Atom chip in netbooks, the small, inexpensive, stripped-down PCs that have become hugely popular with consumers.
This is turning out to be an earnings season when all bets are off on how technology giants will perform. With tech earnings taking the market on a roller-coaster ride, it wouldn’t be surprising if investors are a little sick in the stomach already.