Strong PC demand changes Intel's Q2 revenue expectations

The stronger demand could be because of the Windows XP PC upgrade cycle, an analyst says

Spurred by stronger demand for business PCs than expected, Intel raised its revenue guidance for this quarter.

Intel now expects quarterly revenue of US$13.7 billion, plus or minus $300 million, it said Thursday. The company's previous guidance was $13 billion, plus or minus $500 million, for the quarter.

With PC shipments declining in recent quarters, the revenue guidance upgrade came as a mild surprise to Dean McCarron, principal analyst at Mercury Research.

More businesses are upgrading old Windows XP PCs, which could be a factor in the changed guidance, McCarron said.

"There is a lot of activity on the small-business side," McCarron said.

Microsoft's support for Windows XP ended in April, prompting businesses to buy PCs with newer OSes. PC shipments declined by 4.4 percent in the first quarter of this year, compared to the same quarter last year, according to IDC.

PC sales were weak last quarter and shipments of units may have carried over to the second quarter, McCarron said. That points to a better-than-expected second quarter in PC shipments, but the "XP effect" could be a one-off event with no long-term effect on Intel's earnings, McCarron said.

"It's something to keep an eye on," McCarron said.

Intel will report its second-quarter earnings on July 15.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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