Intel: PC sales bottomed out in Q1, normal seasonal patterns returning
Intel does not offer a formal Q2 guidance, despite besting street estimates, implying PC shipments are improving, and lowering inventories by $700 million in Q1.
By Suzanne Deffree, Managing Editor, News -- Electronic News, 4/15/2009
Intel Corp beat street estimates with its Q1 financial report and said that it believes PC sales have bottomed out, yet the company once again held back on giving a formal guidance for its current quarter.
For Q1,
Intel reported revenue of $7.1 billion, besting street estimates that called for $7 billion in sales. The revenue showed a 26% decline and 13% decline respectively compared to
Q1 2008 and
Q4 2008 results.
The March quarter report, issued Tuesday afternoon, showed operating income of $670 million, down 68% year over year and down 56% sequentially. Net income of $647 million was down 55% as compared to Q1 2008, but up 176% as compared to Q4. And Q1 EPS (earnings per share) of 11 cents was down 56% compared to the year-ago quarter, but up 175% compared to Q4's results.
Intel reported that revenue from its Atom MPUs and chipsets was $219 million, down 27% sequentially, and that the ASP (average selling price) for all MPUs was approximately flat sequentially.
Q1 gross margin of 45.6% was lower than 53.1% in Q4.
Intel attributed the decrease primarily to higher factory underutilization charges and start-up costs.
The company also reported that inventories were reduced by approximately $700 million, or 17%, in the March quarter.
"We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," said Paul Otellini,
Intel president and CEO, in a statement. "
Intel has adapted well to the current economic environment and we're benefiting from disciplined execution and agility. We're delivering a product portfolio that meets the needs of the changing market, spanning affordable computing to high-performance, energy-efficient computing."
Despite the inventory decline, income and EPS gains, and besting of sales estimates,
Intel for the second consecutive quarter provided a less quantitative guidance for Q2.
"Due to continued economic uncertainty and limited visibility,
Intel is not providing a revenue outlook at this time," the company said in its statement. "For internal purposes, the company is currently planning for revenue approximately flat to the first quarter."
The company also said gross margin is expected to be in the mid-40s.
The less than direct forecast was questioned by financial analysts.
"With management saying that PC shipments bottomed in Q1 (thus implying they are improving), and with the Chinese New Year falling smack in the middle of Q1, we are somewhat perplexed as to why
Intel does not expect revenue growth in Q2," Craig Berger and Robert Pikover, FBR Capital Markets semiconductor market analysts, wrote in a report this morning. "We think conservatism and limited visibility is playing some role."
Tim Luke, a Barclays Capital semiconductor market analyst, seconded that. "Post close, MPU leader
Intel delivered solid Q1 results ahead of street estimates but with flattish guide for sales and GM [gross margin] above our printed estimates for margins but below some of lofty investor expectations. We believe Q2 guidance for sales/margins could prove conservative, with [second-half 2009] still targeted at 50%+ GM by management," Luke wrote in a report.
Wall Street's disappointment in the lack of formal Q2 guidance was evidenced in
Intel's stock moves this morning. The stock, INTC, was down more than 5.5% at 9:45am eastern this morning, trading at $15.12. As of 2:30pm eastern, INTC was up to $15.31. The stock closed at $15.62 this afternoon. On Tuesday, INTC closed at $16.01, just before
Intel issued its Q1 report, after climbing to a high of $16.34 that day as industry watchers anticipated encouraging news from the bellwether chipmaker.**Editor's note: This story was updated throughout the day to reflect INTC's trading prices.
