Not as doomed as people thought
Intel's report of Q2 revenue being in line with expectations would appear to be good news. CEO Paul Otellini and CFO Stacy Smith held a conference call with analysts after making the announcement and told Wall Street that business in the quarter played out more or less as expected “against a backdrop of mixed macroeconomic conditions.”
However the company’s shift of its 22-nanometer chips is ahead of the production rate the company had at 32 nanometer features. Ultrabooks computers are doing ok and Otellini said he was pleased with the ramp in sales so far. The first $699 systems should be in the shops soon based on Ivy Bridge processors and the technology is expected to take off next year. Both Smith and Otellini emphasized that the company missed the mid-point of its revenue outlook in the quarter because of weak sales of NAND flash memory chips.
The company’s Data Center Group revenue rose more than 15 per cent with high-performance computing being one of the fastest-growing segments. However consumer PC growth in Western Europe and North America will not recover as quickly as expected, said Otellini. Enterprise and emerging market strength was somewhat offset by slowness in mature markets. Smith said that Intel will not be hiring for a while while there is all this economic mess. He expected that customers will continue to maintain lower inventory levels. Smith clarified that the company would take some 32-nanometer production off line because of lower demand.
Otellini was asked about how it seemed to be doing relatively better than AMD and he said the thought Intel had clawed back some of its rival's low end market. Smith, commenting on the company’s inventory levels, said Intel was able to deliver its Ivy Bridge chips faster than expected. He said that this quarter, as business starts to build, days of inventory will likely decline a bit.