Intel Q2 results signals end to bad days for IT

The darkest time in the personal computer industry’s history may have ended. In the last few months, hardware makers like Intel, Hewlett-Packard and Dell have suffered as one-fifth to one-quarter of their computer sales have vanished. For the first time ever, Microsoft, the world’s largest PC software company, experienced a drop in sales of its Windows software and carried out large-scale layoffs.

As a result, analysts predicted that computer sales would decline at a rate four times greater than during the dot-com bust, the previous low-water mark. But now there are signs that companies tied to the PC industry may stop setting unwelcome records.

On Tuesday, Intel, based in Santa Clara, California, reported sales of $8 billion for the its second quarter, which ended June 30. While that was a far cry from the $9.5 billion it posted in the same period last year, it beat analysts’ expectations by $700 million.

And for the first time since the recession hit, Intel felt comfortable enough to provide a forecast for its present quarter, saying it expected revenue of $8.1 billion to $8.9 billion. Analysts polled by Thomson Reuters had forecast earlier that Intel would post revenue of $7.8 billion this quarter.

‘‘Our second-quarter results were clearly better than we expected,’’ said Paul S Otellini, Intel’s chief executive, during a conference call with analysts.

In April, Otellini declared that he thought the PC slump had reached bottom, and the company’s recent financial results appear to confirm this.

As the world’s largest chipmaker, Intel helps set the pace for the computing industry. For that reason, analysts keep a close eye on the company’s take on the overall market. Increases in the sales of Intel’s chips tend to translate into higher computer sales for HP, Dell and others down the road.

Intel has warned that businesses remain cautious about buying new PCs given the still-limping global economy. Consumers have been the ones who are proving more willing to buy new computers, particularly laptops and their diminutive low-cost cousins, netbooks.

‘‘We saw strengthening through June,’’ said Stacy J Smith, the chief financial officer at Intel, during an interview. Intel expects the rising demand to carry over into the second half of this year.

Smith added that sales in Asia had picked up, particularly in China, and that sales in the United States were solid. Over all, however, the immediate fiscal conditions remain sobering for Intel.

During its second quarter, Intel’s net income fell to $1 billion from the $1.6 billion it reported during the same period last year. Intel earned 18 cents a share, down from 28 cents, beating analyst estimates by 10 cents.
Those figures exclude charges tied to a $1.45 billion fine levied against Intel by the European Commission for anti-competitive practices in the PC market. With the fine included, Intel posted a loss of $398 million, or 7 cents a share.

Still, Intel reported higher-than-expected gross margins and a quarter-to-quarter rise in sales of chips, lifted by healthier sales of laptop chips.