Intel tried to mollify analysts concerned about its surprisingly low earnings report today with promises for a stronger 2006.
Intel posted earnings of 40 cents a share, three cents below analysts’ estimates,
on sales of $10.2 billion — $360 million less than expected. Intel also
predicted a decline in gross margins from 62 percent to 59 percent. In a conference call, the company cited
lower than expected desktop demand as the reason for the decrease.
“Based on what Intel said in December in their mid quarter update, they
should know what’s going on, so it’s a real shock when they can’t forecast
four weeks in advance. That should be a slam dunk,” said Nathan Brookwood, an
analyst with Insight64.
Rival AMD is scheduled to report earnings Wednesday. Intel CFO Andy Bryant said in a conference call with analysts that he believes
Intel may have lost a point in overall market share to AMD in the fourth
quarter, but couldn’t be sure until AMD reports its figures.
“It’ll probably be a lot more than a point in servers, where AMD’s done very well,” noted Brookwood.
But Intel CEO Paul Otellini was bullish in the call about Intel’s
prospects going forward. “We’re a technology generation version well ahead
of them in our power envelope and die size,” said Otellini. “This
has clear merit in notebooks and blade centers, and clear merits in consumer
PCs over time.”
He said that Intel is planning to launch its first enterprise brand for desktop computers by
mid-year. The brand, with its name still undisclosed, will focus on
manageability. Otellini said the release will be well-timed, as it will
coincide with IT shops looking to purchase systems that are “Vista-ready.”
Vista is the next version of Microsoft’s operating system after XP and is
slated to ship late this year. Otellini said the enterprise desktop will be
based on Intel’s Conroe, a next-generation architecture based on the
latest Core Duo release.
Despite missing analysts’ expectations and its own forecasts, Bryant said,
“2005 was a good year, and the company is in excellent financial condition.
In any year, while the economy may fluctuate, the pace of our innovation
will not stop.”
