Intel: Don’t Call It a Comeback
by John Paczkowski
Posted on July 15, 2009 at 6:00 AM PT
Three months after Intel CEO Paul Otellini announced that the PC market had reached bottom, the company’s latest financials, which handily beat expectations, seem to have proven him right. “The worst is now behind us,” he said. And the tech economy is showing signs of muted recovery.
The question is: Is that recovery sustainable?
The answer, according to Otellini, is yes. “The second quarter was clearly better than we expected,” he told analysts on a conference call. “Customers signaled increased confidence in their ordering patterns.” After months of global recession, Otellini noted that the company’s second-quarter results “reflect improving conditions” in the PC market.
“Intel is seeing a firming up in demand,” he added. “It’s encouraging news for the industry.”
Indeed. Intel is a bellwether for the tech sector; as goes Intel, so goes the industry. So, if Intel says demand is beginning to return to normal seasonal patterns, then the industry may truly be stabilizing. That said, there’s still quite a bit of economic volatility–enough to suggest that it might be wise not to read too much into Intel’s performance.
Said analysts at JP Morgan: “Although the Intel quarter was clearly spectacular on all fronts, we continue to believe the upside was driven by inventory replenishment as we have not seen any evidence of increasing PC demand.”
Shares of Intel (INTC) are trading up 6.77 percent at $17.97 this morning.
