<div class='quotetop'></div><div class='quotemain'>The giant is taking a nap.
Intel warned on Friday that its revenue for the first quarter would come in at between $8.7 and $9.1 billion, roughly $500 million lower than estimates the company issued in January. The Santa Clara, Calif.-based chipmaker cited a weak market and a "slight" market share loss.
Analysts generally agree about the market, but are putting more emphasis on the loss of share. Some have pointed to the momentum shown by Advanced Micro Devices, which has been far more aggressive over the past 18 months. The rival chipmaker has been strengthening its ties to PC makers, most prominently with Hewlett-Packard, and keeping prices low.
"They have been very aggressive about getting share and getting shelf space. We haven't seen a lot from Intel," NPD Techworld analyst Steve Baker said.
AMD's surge can be seen most strongly in the U.S. retail market, which accounts for about 9 percent of global PC shipments. In the first seven weeks of 2006, AMD's share in desktops in that area climbed to 81.5 percent, while Intel's has slid to 18.5 percent, Baker said. That's almost a complete reversal of their typical relative positions.
In notebooks, Intel's share has declined to 63 percent, even though Baker and others generally agree that Intel enjoys a technological advantage in laptops.
The retail PC market itself is holding steady, Baker noted. "Overall volume is OK through the first six to eight weeks of the year. We're still growing in double digits in notebooks and single digits in desktops," he said.
Price plays a key factor. In recent weeks, the average AMD desktop sold in American outlets for $578, Baker said. The average Intel desktop cost $780. In notebooks with Intel chips, the average price was $957, lower than AMD's $1,016.
Other analysts, however, said that not all of Intel's woes can be laid at AMD's feet. For instance, PC sales typically slow by between 5 and 10 percent from the fourth quarter to the first. And for the past six years, Intel has seen revenue decline in that period by 7.2 percent, according to its financial statements.
The company reported revenue of $10.2 billion in the fourth quarter. With its updated outlook for this quarter of $8.7 billion to $9.1 billion, Intel is looking at a decline of 14.7 percent to 10.7 percent. Thus, seasonal decline could account for about half or more of the slide.
Price cuts are also a reality. This year, shipments of PCs will grow by 9.3 percent, or even a little more, Gartner analyst Miko Kitagawa has estimated compared with 2005. By contrast, overall revenue will decline by 0.3 percent, she said. That means units sell for a lower price than before. The trend looks likely to continue into 2007, when shipments will increase 7.6 percent, but revenue will rise only 0.6 percent, she said.
Server chip sales
Although server processors represent a small portion of Intel's shipments, the company makes more money on the sale of a server chip than on other processors. The company's struggles to get its Itanium server processor off the ground have been well documented, but Intel is also having competitive problems in this market.
The Opteron chip has lifted AMD's share of the x86 server processor market from virtually zero a few years ago to 14.3 percent in the fourth quarter of 2005, according to IDC. Several high-end customers have installed Opteron servers, and the latest is Google, according to Mark Edelstone at Morgan Stanley. Almost all of that came at Intel's expense.
"Intel has never really had to deal with a competitor in the x86 space that had its act together," said Nathan Brookwood, principal analyst at Insight 64. "But how much of the problem is due to AMD's competitiveness, and how much is due to internal factors like chipsets and inventories?"
Intel has struggled to manage capacity over the last few years, as it has switched to new manufacturing technology. For example, stronger-than-expected demand for PCs last year forced it to stop making chipsets for low-end desktop processors, so it could concentrate on fulfilling all of its processor commitments. That left the door open for AMD to nab market share in desktop PCs. Desktop sales are only growing slowly worldwide, but still represent a large segment of Intel's revenue.
Intel's hopes are clearly pinned on the future. Intel is in a better position against AMD in the notebook market, and shipments of these are soon expected to overtake desktops. As for servers and desktops, it's pinning its hopes on a new chip blueprint. Next week, at the Intel Developer Forum, the company plans to walk hardware developers through the intricacies of its next-generation microarchitecture (NGMA), which is slated to replace the hurting Netburst architecture in the Pentium 4 and Xeon chips.
Desktop and notebook chips based on NGMA should deliver a 20 percent performance improvement over comparable processors from AMD in the second half of this year, Mooly Eden, general manager of Intel's Mobile Platforms Group, said in a recent interview. AMD disputes this, but it's clear that Intel will be in much better competitive shape with its Conroe desktop chip and its Merom notebook chip, Brookwood said.
Before Intel gets to Conroe and Merom, however, it will have to endure a transition period that looks likely to be difficult, said Kevin Krewell, editor in chief of The Microprocessor Report. Concerns that the company will have to cut inventories to make room for the new chips prompted Merrill Lynch analyst Joe Osha to lower his targets for Intel's 2006 earnings per share on Thursday, even before Intel issued its warning.
It looks like the storm could pass this year for Intel, Brookwood said. Investors punished Intel's stock early on Friday, but the stock closed down only 17 cents at $20.32 on the Nasdaq.
"They clearly are at the tail end of what has been a pretty painful period for Intel," Brookwood said. "They had to tear up their road map and scramble to find new products to drop into the places where the old products were going to appear."</div>
Yer out!!XD
All joking aside I don't think the PC market is losing revinue....
It most likely is because of the AMD sales and the Server chip cells.IBM is having better server chips and are gaining on the AMD sales.
Intel warned on Friday that its revenue for the first quarter would come in at between $8.7 and $9.1 billion, roughly $500 million lower than estimates the company issued in January. The Santa Clara, Calif.-based chipmaker cited a weak market and a "slight" market share loss.
Analysts generally agree about the market, but are putting more emphasis on the loss of share. Some have pointed to the momentum shown by Advanced Micro Devices, which has been far more aggressive over the past 18 months. The rival chipmaker has been strengthening its ties to PC makers, most prominently with Hewlett-Packard, and keeping prices low.
"They have been very aggressive about getting share and getting shelf space. We haven't seen a lot from Intel," NPD Techworld analyst Steve Baker said.
AMD's surge can be seen most strongly in the U.S. retail market, which accounts for about 9 percent of global PC shipments. In the first seven weeks of 2006, AMD's share in desktops in that area climbed to 81.5 percent, while Intel's has slid to 18.5 percent, Baker said. That's almost a complete reversal of their typical relative positions.
In notebooks, Intel's share has declined to 63 percent, even though Baker and others generally agree that Intel enjoys a technological advantage in laptops.
The retail PC market itself is holding steady, Baker noted. "Overall volume is OK through the first six to eight weeks of the year. We're still growing in double digits in notebooks and single digits in desktops," he said.
Price plays a key factor. In recent weeks, the average AMD desktop sold in American outlets for $578, Baker said. The average Intel desktop cost $780. In notebooks with Intel chips, the average price was $957, lower than AMD's $1,016.
Other analysts, however, said that not all of Intel's woes can be laid at AMD's feet. For instance, PC sales typically slow by between 5 and 10 percent from the fourth quarter to the first. And for the past six years, Intel has seen revenue decline in that period by 7.2 percent, according to its financial statements.
The company reported revenue of $10.2 billion in the fourth quarter. With its updated outlook for this quarter of $8.7 billion to $9.1 billion, Intel is looking at a decline of 14.7 percent to 10.7 percent. Thus, seasonal decline could account for about half or more of the slide.
Price cuts are also a reality. This year, shipments of PCs will grow by 9.3 percent, or even a little more, Gartner analyst Miko Kitagawa has estimated compared with 2005. By contrast, overall revenue will decline by 0.3 percent, she said. That means units sell for a lower price than before. The trend looks likely to continue into 2007, when shipments will increase 7.6 percent, but revenue will rise only 0.6 percent, she said.
Server chip sales
Although server processors represent a small portion of Intel's shipments, the company makes more money on the sale of a server chip than on other processors. The company's struggles to get its Itanium server processor off the ground have been well documented, but Intel is also having competitive problems in this market.
The Opteron chip has lifted AMD's share of the x86 server processor market from virtually zero a few years ago to 14.3 percent in the fourth quarter of 2005, according to IDC. Several high-end customers have installed Opteron servers, and the latest is Google, according to Mark Edelstone at Morgan Stanley. Almost all of that came at Intel's expense.
"Intel has never really had to deal with a competitor in the x86 space that had its act together," said Nathan Brookwood, principal analyst at Insight 64. "But how much of the problem is due to AMD's competitiveness, and how much is due to internal factors like chipsets and inventories?"
Intel has struggled to manage capacity over the last few years, as it has switched to new manufacturing technology. For example, stronger-than-expected demand for PCs last year forced it to stop making chipsets for low-end desktop processors, so it could concentrate on fulfilling all of its processor commitments. That left the door open for AMD to nab market share in desktop PCs. Desktop sales are only growing slowly worldwide, but still represent a large segment of Intel's revenue.
Intel's hopes are clearly pinned on the future. Intel is in a better position against AMD in the notebook market, and shipments of these are soon expected to overtake desktops. As for servers and desktops, it's pinning its hopes on a new chip blueprint. Next week, at the Intel Developer Forum, the company plans to walk hardware developers through the intricacies of its next-generation microarchitecture (NGMA), which is slated to replace the hurting Netburst architecture in the Pentium 4 and Xeon chips.
Desktop and notebook chips based on NGMA should deliver a 20 percent performance improvement over comparable processors from AMD in the second half of this year, Mooly Eden, general manager of Intel's Mobile Platforms Group, said in a recent interview. AMD disputes this, but it's clear that Intel will be in much better competitive shape with its Conroe desktop chip and its Merom notebook chip, Brookwood said.
Before Intel gets to Conroe and Merom, however, it will have to endure a transition period that looks likely to be difficult, said Kevin Krewell, editor in chief of The Microprocessor Report. Concerns that the company will have to cut inventories to make room for the new chips prompted Merrill Lynch analyst Joe Osha to lower his targets for Intel's 2006 earnings per share on Thursday, even before Intel issued its warning.
It looks like the storm could pass this year for Intel, Brookwood said. Investors punished Intel's stock early on Friday, but the stock closed down only 17 cents at $20.32 on the Nasdaq.
"They clearly are at the tail end of what has been a pretty painful period for Intel," Brookwood said. "They had to tear up their road map and scramble to find new products to drop into the places where the old products were going to appear."</div>
Yer out!!XD
All joking aside I don't think the PC market is losing revinue....
It most likely is because of the AMD sales and the Server chip cells.IBM is having better server chips and are gaining on the AMD sales.