Upbeat reports from tech firms

• Intel

Intel reported its results after the financial markets closed last night. The numbers were good and better than expected. Both revenues and profits were much stronger than in the first quarter. Not only that but Intel is very famous for giving accurate insight into the technology sector 6-12 months out. That market commentary and guidance was upbeat and clearly indicates that Intel’s result have bottomed. The commentary also seems to suggest that the computer chip biz around the world is improving, too.

Because of the technology sector’s importance to the global economy – the results from Intel are very encouraging.

• ASML

ASML, a Dutch firm that makes equipment used to make computer chips said that it expects to break even by the end of 2009. They also saw a firming of their sales. These results are significant because computer chip makers will only place orders for new equipment if they are confident they can use them to produce saleable chips.

• Dell

Separately, Dell says that its primary customers, businesses, are delaying PC purchases. They also said that consumers are switching to lower cost PCs – that hurts the profit margins of companies like Intel, Advanced Micro Devices, Hewlett-Packard, and Dell. The firm also said that world-wide technology spending is weak. These remarks clearly contrast with what Intel is experiencing and reporting.

Regarding consumers switching to lower cost PCs – this is a trend that is immutable and likely to continue. Why? Because long ago most PCs provide performance completely amenable to most of us. We have PCs because we want good Internet access, e-mail, and likely one or two applications like a word processor. Then there is the odd program that makes the computing experience more personalized, like having Photoshop or some other “fun” software. That’s been most people’s computing experience for years. So if the chip makers and computer makers can provide that experience more cheaply then consumers will buy it. Duh! I have avoided Intel and computer makers for 5 years for this very reason. Not only that but these companies are soon to see an erosion of profit margin from business customers, too. Most office employees are also sated in terms of the computing experience. So Dell’s experience is something I anticipate will continue – perhaps it has been exacerbated by the recession – but the process is inevitable.

Jason