In an environment hungry for good economic news, Intel Corp. delivered a share of it Tuesday in its third-quarter results, which it said offered evidence of a “recovering market.”
Much of Intel’s gain was driven by consumers buying mobile devices and PCs, and not by large enterprises.
“The consumer market has been what’s holding the business up for the past year, definitely not the business,” said Dean McCarron, an analyst at Mercury Research in Cave Creek, Ariz. Nonetheless, “we were expecting Q3 to be an improved quarter, but it’s is coming in very strong.”
Intel’s revenue at $9.4 billion was up $1.4 billion from the prior quarter but less than the year-ago quarter of $10.2 billion. Despite continuing economic uncertainties and high unemployment, the word Intel used to describe the results was “momentum,” an expectation that this will continue.
Intel said it is through the cutting phase of its business and is now “in the growth effort,” said one executive said on an analyst conference call.
Intel’s view follows release of a survey Monday of 44 professional forecasters by the National Association of Business Economics, which found the recession is over but that growth will likely be moderate. The unemployment rate is forecast to rise to 10 per cent in the first quarter of next year and edge down to 9.5 per cent by the end of 2010. For Intel’s workforce, it’s hard to tell what a growth phase may look like. At this point last year, Intel had 83,500 employees, and it’s down to 80,800, despite acquiring Wind River Systems Inc. for $884 million this year. Separately, a Microsoft Corp.-funded study recently predicted that Windows 7’s release will add some 25,000 jobs in the eco-systems from software development to retail sales.
The outlook for chip and PC markets seems more certain.
“What I think we are seeing in the Intel announcement is a general sense of optimism in the Windows 7 announcement next week,” said Charles King, an analyst at Pund-IT in Hayward, Calif.
