MANHASSET, N.Y. As the leading semiconductor supplier and arguably single-most important company in the electronics age, Intel Corp. is closely watched by analysts and industry observers. The company’s dismal first-quarter results and weak near-term forecast have marred what have so far been relatively good March quarter results by a number of electronics companies.
Intel has struggled to meet its downgraded guidance the past few quarters. Worse yet, the company cut its 2006 capital spending and revenue forecast, blaming an inventory overhang and a weakening PC market.
During a conference call with analysts, Intel chief executive Paul Otellini admitted the company needed to re-examine its operations.
How that re-examination translates into Intel’s future course of action remains to be seen. It was apparent from the call that analysts, unhappy with the company’s performance in recent quarters, will continue to hammer away at Intel. Some are skeptical Intel can muster the second-half rebound it expects to stage.
Elsewhere, AMD Inc., which has been making inroads into its chief rival’s market share, had a solid first quarter but projected a flat second quarter, citing lingering inventory overhang and spot weaknesses in markets such as Europe. Some analysts noted a fall in AMD’s stock prices in weeks since Intel lowered its first-quarter guidance, hinting of a possible slowing in the PC market.
Market research forecasts say the PC market is slowing, but is not in trouble. In March, market research firm Gartner Dataquest projected a 10.7 percent rise in PC shipments, compared to 15.5 percent in 2005. But at the same time, the firm said notebook PC shipments remain strong, thanks to many consumers continuing to replace desktops with notebooks.
Another market research firm, Current Analysis, said earlier this month sales of
higher-end desktops, replete with powerful processors, huge hard drives, and fast graphics chips, are helping desktops stage a mini-rebound.
Elsewhere, early results from the rush of earnings announcements look good. Fairchild Semiconductor returned to profitability. Intersil Corp. posted strong results, and Cypress Semiconductor beat earnings guidance.
In addition, mobile handset makers continue to prosper, with Motorola and Nokia reporting strong handset shipments.
Broadband communications suppliers posted mixed results, with Broadcom Corp. posting sales and earnings gains but PMC-Sierra posting a loss despite higher sales.
Additional reporting by Mark Lapedus, Dylan McGrath, Peter Clarke, and John Walko