updated 11:10 am EDT, Fri August 27, 2010
Intel drops summer outlook based on home PC slump
Intel confirmed fears on Friday and dropped its expectations for its summer results based on a slump in PC sales. It dropped its revenue outlook from a range of $11.2 billion to $12 billion down to $11 billion with a range of $200 million above or below. The company pinned the drop on "weaker than expected demand" among home PCs.
The company wouldn't name clients, but it corroborated rumors of Acer, HP and Lenovo shedding orders by noting that inventory of PCs was "in-line" with its newly lowered guidance. Reports had surfaced that, from July onwards, some computer builders had an excess inventory and were slowing orders to help clear out stock.
Several factors are expected to play into the drop. A resurgence of economic worries may have cut spending by customers leery of big purchases, but it may also reflect a move away from full computers and towards phones and tablets for some tasks. Both Acer and Samsung are either known or believed to be lowering expectations for netbooks as customers either jump ship for the iPad or for an internally developed tablet. While usually more expensive, tablets are more clearly different than regular notebooks and are often much easier to carry as well as longer-lasting.
The slump could mute earlier gains for many of the top tier companies but won't necessarily affect all. Apple has continued with above-average growth and so far hasn't shown signs of slowing down in the summer. Its focus on high-end computers has kept it relatively immune from economic troubles, as its customers are less price-sensitive than those shopping the sometimes volatile low-end PC market.