Earnings season is slowly starting. No, Intel is not a PLM company, but it is an important
indicator of global demand. Intel today reported first quarter revenue of $7.1 billion, operating
income of $670 million and net income of $647 million. The net is far higher than analyst
forecasts but still significantly lower than a year ago, so look for stock prices to fall.
CEO Paul Otellini said the following in the press release announcing Q1 results: "We
believe PC sales bottomed out during the first quarter and that the industry is returning to
normal seasonal patterns. Intel has adapted well to the current economic environment and
we’re benefiting from disciplined execution and agility. We’re delivering a product portfolio
that meets the needs of the changing market, spanning affordable computing to high-
performance, energy-efficient computing."
The lessons for engineering software suppliers: One of the world’s largest manufacturers
thinks that we may be on the upswing — or at least no longer on the downswing. Too, Intel
is using a portfolio approach to target multiple market sectors, spreading its risk and hoping
that, if one sector lags in recovery, others will make up for it. A lesson PLM companies
have learned and struggle to implement.
The press release also included factoids about Q1, two of which are interesting for us. First,
prices remained stable across the chip set sold by Intel. That’s good — it means that Intel
(and its competitors) were not forced to discount heavily to sell. Second, inventories were
reduced by approximately $700 million in the first quarter and now total $3 billion. That
sounds good, but is only so-so: most of the drawdown was in raw materials, meaning that
Intel isn’t building up for future production. But finished goods inventory did decrease (by
$340 million) so people are buying.
So far, no PLM company has pre-announced, which usually means that earnings are within
a reasonable distance of earlier forecasts. Not many made forecasts, so we can’t really tell.
But perhaps they also will have positive news.