Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Did we -- and I mean everybody -- misread the PC market?
It looks that way today in the light of Intel's (Nasdaq: INTC ) third-quarter report. Non-GAAP earnings jumped 33% year over year to $0.69 per share on $14.3 billion in revenue -- a 29% annual boost. Both numbers were comfortably higher than analyst targets, and the midpoint of the fourth quarter's revenue guidance landed 3% above Street projections as well. Intel shares climbed more than 4% for most the day while the broader Nasdaq swooned. Intel shares reached levels not seen since before the economic meltdown in 2008.
This is all good news for Intel investors, made even better by a $10 billion addition to the already-generous share-buyback program. And hey, don't forget that Intel recently reupped its dividend -- the second payout boost in 2011. None of this is terribly surprising, though. It's just how this shareholder-friendly company rolls.
No, the real shock is the source of this stellar performance. Yep, Intel leaned on regular old PC systems more than on servers or tablets. "We were very pleased with the momentum in our notebook PC business and consumer demand for our industry-leading second-generation Intel Core processor family," said CEO Paul Otellini.
But isn't the PC market dead or at least dying? Apple (Nasdaq: AAPL ) is killing the PC space with iPads and iPhones, after all.
Then again, Intel rival Advanced Micro Devices (NYSE: AMD ) recently showed signs of decent PC demand as well, even as it slashed financial targets because of a manufacturing hiccup. And as circumstantial evidence for the same trend, big-iron giant IBM (NYSE: IBM ) really didn't impress anybody with this quarter's anemic results. Maybe Hewlett-Packard (NYSE: HPQ ) really should hold on to its market-leading PC division after all. Perhaps Dell (Nasdaq: DELL ) should reverse course and refocus on consumer systems in the end.
There's always a catch, though. You see, the magic isn't happening in America. The consumer growth is happening elsewhere. "China was up 12%, India 21%, Turkey 14%, and Indonesia 23%," Otellini explained. "China is now the No. 1 PC consumption market in the world, while Brazil has become No. 3."
So the American PC patient is still in critical condition, but opportunities abound outside our borders. We weren't all that wrong after all.
What will Intel do next do delight, surprise, or frustrate shareholders? Add Intel to your Foolish watchlist, and you'll be sure to catch the news while it's still piping hot.
RSS Headlines
Comments from our Foolish Readers
Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the
Report this Comment icon found on every comment.
Report this Comment On October 20, 2011, at 11:41 AM, piranha60565 wrote:
For the record, the idea that PCs are dying is just ignorant. Anyone who is in tech could tell you that and it is the reason that I invested in intel earlier this year.
Tablets will never be able to do the things that desktops can do and because of this, PCs will always be used for business. Apple invented a new way to sell you a lesser powerful computer and it was the "Tickle me Elmo" for adults and kids alike. Sure it has been cutting into PC sales, because its a fad.
Add to this the fact that intel has great partnerships and has always treated their partners well. It is only a matter of time before intel gets into the tablet/phone market anyway.
"Did we -- and I mean everybody -- misread the PC market?"
Nope, just you guys. The people who just looked at numbers and didn't use their brain to logically deduce what a dumb idea "PCs dying" actually is.
Add your comment.