Does Intel's Blowout Quarter Signal IT Turnaround? - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
IT Leadership // CIO Insights & Innovation
Commentary
4/15/2010
08:09 AM
Bob Evans
Bob Evans
Commentary
50%
50%

Does Intel's Blowout Quarter Signal IT Turnaround?

As we noted yesterday, Intel CEO Paul Otellini went to great lengths in the company's earnings call to avoid linking Intel's record-setting revenue with a return of robust corporate spending on IT. But a Wall Street Journal article says that "Intel's latest view suggests corporate spending is now flowing into tech again." What's the real story?

As we noted yesterday, Intel CEO Paul Otellini went to great lengths in the company's earnings call to avoid linking Intel's record-setting revenue with a return of robust corporate spending on IT. But a Wall Street Journal article says that "Intel's latest view suggests corporate spending is now flowing into tech again." What's the real story?Here's an example of Otellini's cautious stance during the earnings call on the matter of a vigorous turnaround in corporate IT spending from yesterday's post, Intel CEO Otellini Sees Signs Of Corporate IT Upturn:

"I am still not going to go out on a limb and our customers certainly aren't going to go out on a limb and say there is a corporate refresh snapback coming. I think what we see this cycle is much more people are buying things to replace older machines because it is just cheaper."

But the Journal article pretty much dismisses Otellini's reluctance to call a rebound, noting that last quarter, when Intel reported a 42% jump in the sale of server chips, it was equally reticent:

On Tuesday, Intel, which makes the chips that run the vast majority of the world's computers, reported runaway sales and earnings that outpaced Wall Street's expectations. Demand was strong worldwide, Intel said, but unlike earlier quarters, where products aimed at consumers led the way, high-performance chips used in the computers and servers bought by businesses were significantly stronger.

"CIOs' outlooks on the world are improving," Intel Chief Financial Officer Stacy Smith said, referring to chief information officers who frequently make the tech spending decisions at companies. Smith said businesses were spending again, taking advantage of leaps in technology that make newer computers more efficient and less costly than the devices currently occupying cubicles.

That's a big change from just a quarter ago, when Intel was reluctant to attribute a 42% jump in server-chip sales to a return of business spending.

Otellini is surely being wise by tempering his comments with extra doses of caution because the brutal environment of 2009 is only a few months behind us and while Intel's surging revenue is surely a good sign, it in itself doesn't offer definitive proof that healthy spending has come back.

We'll all know a lot more next week and next month after IBM reports its quarterly numbers on Monday, April 19, and Hewlett-Packard reports its results on Tuesday, May 18.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Slideshows
Data Science: How the Pandemic Has Affected 10 Popular Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  9/9/2020
Commentary
The Growing Security Priority for DevOps and Cloud Migration
Joao-Pierre S. Ruth, Senior Writer,  9/3/2020
Commentary
Dark Side of AI: How to Make Artificial Intelligence Trustworthy
Guest Commentary, Guest Commentary,  9/15/2020
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
IT Automation Transforms Network Management
In this special report we will examine the layers of automation and orchestration in IT operations, and how they can provide high availability and greater scale for modern applications and business demands.
Slideshows
Flash Poll