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Instant View: Intel presages weak PC market; Gelsinger CEO at VMWare
SAN FRANCISCO |
SAN FRANCISCO (Reuters) - Top chipmaker Intel Corp (INTC.O) forecast weaker than expected current-quarter revenues, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales.
Also on Tuesday, storage corporation EMC (EMC.N) and subsidiary VMWare Inc (VMW.N) announced preliminary quarterly results, and confirmed that EMC's Pat Gelsinger will take the helm at VMWare.
VIJAY RAKESH, ANALYST, STERNE AGEE
"They cut numbers, but inventories are up quite a bit. Things are slowing and high inventories may be a headwind. People were expecting them to guide revenues to be flat or lower in the third quarter.
"Things seem to be slowing much more. We still think the guidance is a bit too optimistic."
CRAIG ELLIS, ANALYST, CARIS & CO
"Intel did a very good job delivering results close to where estimates had drifted on the Street. Their Q3 estimate was very close to what I was expecting. If you look at the full-year guidance for 2012, they are basically saying 7.5 percent third quarter growth and mid single-digit growth in the fourth quarter. That's very close to Street expectations.
"As macro events have transpired in the second quarter, people looked at the original high single-digit guidance as being stretched. The Street would have been concerned had they stuck with that guidance, but they didn't.
"It's a solid print and outlook for the third quarter and full year, given the economic backdrop they're dealing with. The PC client business -- their biggest -- was $60 million below our estimate. That's infinitesimal. The data center business was a little bit better than expected."
DOUG FREEDMAN, ANALYST, RBC CAPITAL
"Execution in Q2 was a little bit better than expected, but it looks like they are balancing that with a little bit lower revenue growth and spending than I was expecting in Q3. Gross margins look pretty good.
"This will largely be viewed as in line, with Q2 a little bit better than expected. But there's a risk that these numbers could still sound challenging to achieve.
"The seasonal growth that Intel is expecting is less than normal. That is clearly taking into account global macro conditions. Normal seasonal PC demand would show Q3 growth of at least 9 to 10 percent, and Intel's guidance is comfortably below that."
CHRIS WOLF, ANALYST, GARTNER
"It's an interesting move, Paul has done a tremendous job at VMWare. He's primarily responsible for taking VMWare from a startup to a global organization.
"This is good for EMC. It needs the type of leadership that someone like Paul can bring. You have to wonder how much longer Joe Tucci will be CEO, and that Paul may take over if he wants to.
VMWare has really kept up with Gartner's expectations in 2012 in server virtualization. Microsoft will not have a real competitive product out until the end of the year.
"Pat Gelsinger is a very capable executive. For folks on the inside, it will be an easy transition because Pat is a lot like Paul with his tech background. He is not afraid to talk tech and he will have instant credibility in Palo Alto."
RICK SHERLUND, ANALYST, NOMURA SECURITIES
"There's a sense of relief that the quarter is okay, but I don't think investors are happy to see EMC slopping out Paul Maritz. If It's not broken, why do you fix it?
"I'm glad they made the quarter okay, but I don't like shifting management like this. I'm just not convinced this is in the best interest of the shareholders.
"Maritz is a known entity, we already have a new CFO, why do we have to have a new CEO at this time? I don't think investors are happy.
"I mean he was running one of the biggest software companies, and now he's doing this strategy thing at EMC."
(Reporting by Malathi Nayak and Alistair Barr in San Francisco and Himank Sharma in Bangalore)
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