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Intel Paints Worst-Case Scenario for 2009

Intel is cautioning investors to prepare for the worst in the coming year, which may position the company to deliver better-than-expected results if economic conditions should improve. The trouble is that neither Intel nor anyone else can predict with any certainty when a turnaround is likely to begin.

Intel(Nasdaq: INTC) appears to be playing it safe with an ugly first-quarter forecast.

The chipmaker reported Thursday that profit plunged 90 percent and sales slipped 23 percent during the last three months of the year, matching analysts' subdued estimates.

Wall Street was braced for the bad news: Intel had lowered its fourth-quarter guidance twice, including once just last week, warning that weaker-than-expected PC demand was hammering down demand for its microprocessors.

So what about 2009? Intel said it doesn't know when demand will pick back up, so the Santa Clara, Calif.-based company set the bar low and offered first-quarter guidance at the low end of what analysts were expecting.

Good Place to Start

Intel said it 2009 sales will likely be around US$7 billion, which translates to a decline of more than 25 percent from the first quarter of 2008. Gross profit margin should also sink sharply, falling from more than 50 percent of sales to the low-40 percent range, it said.

Gross profit is a key measure of how well a company is controlling its costs, but falling demand, heavy investment in factory upgrades and big costs for running factories at less than full throttle will all take their toll on Intel's bottom line.

Intel said the financial crisis has made it so difficult to predict revenue that the company wouldn't offer a precise estimate. Analysts surveyed by Thomson Reuters were expecting $7.3 billion in sales, on average, but estimates ranged from $6.6 billion to as high as $9.3 billion.

The profit forecast was below many estimates, but was good enough to send Intel's shares up 3.8 percent in after-hours trading.

"I don't think they're good numbers, but they're good numbers to start from," said Cody Acree, senior semiconductor analyst with Stifen,Nicolaus & Co "We all knew they would be bad and that they'd come down, but they've set a base to work from."

Economy Hasn't Hit Bottom

Intel's Chief Financial Officer Stacy Smith said in an interview that computer makers' inventory levels fell in the fourth quarter and continued falling into the first quarter, which means they're not buying as many new chips.

He said Intel's product lineup positions the company well to take advantage when demand starts rising again, but Smith cautioned that no one knows yet when that might be.

"It's very difficult to precisely call when we'll hit the bottom," he said.

In the fourth quarter, Intel's net income was $234 million, or 4 cents per share, compared with $2.3 billion, or 38 cents per share, in the year-ago period.

Profits were squeezed by a freeze in information technology spending and a shift toward low-margin processors for a class of little laptops known as "netbooks." A big reason for the severity of the fourth-quarter drop, though, was a $1 billion writedown of the value of Intel's investment in Internet provider Clearwire.

Clearwire specializes in a new type of wireless broadband technology called "WiMax" that Intel is building into its chips, and has stumbled on fears the credit crunch will derail its ambitious network buildout plans.

Intel's sales were $8.2 billion, a 23 percent shortfall from last year.

For all of 2008, Intel earned $5.3 billion, 24 percent lower than a year ago, on sales of $37.6 billion, a 2 percent decline.

45nm Advantage

PC demand is sinking fast, which takes its toll on Intel because Intel owns 80 percent of the market for microprocessors, the brains of personal computers. Market research firmsIDCand Gartner(NYSE: IT) reported this week that PC sales growth in the fourth quarter was the worst it's been in six years, with the slump expected to drag out until possibly 2010.

Bobby Burleson, managing director of equity research for Canaccord Adams , called Intel's profit forecast disappointing, but said it likely indicates that Intel has "come clean with what sounds like a worst-case scenario for this year."

One area where Intel shines is controlling its manufacturing costs, where it enjoys a big advantage over smaller rival Advace Micro Devices (NYSE: AMD) . Intel's quicker transition than AMD to 45-nanometer manufacturing technology, which shrinks the size of the chips' circuitry, has made each chip cheaper to produce. That has helped cushion the blow of falling sales.

AMD -- which has lost billions of dollars over the past two years, recently changed CEOs, and is spinning off its factories to save money -- warned that its fourth-quarter sales will likely come in 33 percent lower than last year. AMD reports quarterly results Jan. 22.

During the regular trading session before the earnings report, Intel stock rose 21 cents, 1.6 percent, to close at $13.29. The shares hit $13.85 in after-hours trading.

Report: Intel Cooking Up More Robust Low-Power Processors

Intel is reportedly cooking up a new entry in the consumer ultra low voltage market. CULV chips are built for highly mobile consumer products like very small laptops. Intel's Atom chips can already be found in many netbooks, but a new CULV offering may go up against Yukon, a recently unveiled platform from rival AMD.

Intel (Nasdaq: INTC) is reportedly preparing a new consumer ultra low voltage (CULV) platform aimed at small, highly portable notebook computers.

The new push will focus on ultra-mobile PCs (UMPCs) priced between US$700 to $900, according to Digitimes. Consumers should look for the new platforms in hardware beginning in the second quarter of 2009.

Intel would not confirm or deny the information in the report.

"We have not made an announcement concerning plans for consumer ULV. We have seen a lot of rumor and speculation in several reports; however, it is our policy not to comment on speculation or rumor," Connie Brown, an Intel spokesperson, told TechNewsWorld.

Processing Rumor Mill

Despite the lack of any immediate and specific word from Intel regarding its CULV plans, the company has spoken about turning out a CULV platform for some time, Jon Peddie, president of Jon Peddie Research, told TechNewsWorld.

"It's a nifty segment in the mobile market and provides price points and features -- like screen size -- for several categories. The OEMs love it," he said.

While no specifications or details are available for the upcoming platform, Peddie confirmed that HP(NYSE: HPQ) will be one of the first manufacturers to feature it in its notebook computers.

"Where HP goes the others will follow," Peddie pointed out.

Dividing the Market

The new CULV platform is reportedly part of Intel's 2009 master plan to divide the market into four categories: traditional notebooks 12.1 inches and above; netbooks running Atom processors or technology based on Pineview; mobile Internet devices (MIDs) sporting the Menlow chip; and 11-inch to 13.3-inch ultra-portable notebooks.

Any upcoming CULV platform from Intel would pit the company against its arch-rival AMD(NYSE: AMD) , with its Yukon platform.

Announced two weeks ago at the Consumer Electronics Show (CES), the Yukon platform is designed for ultrathin notebooks and will enable hardware makers to design very light machines with entertainment features and functionality normally associated with larger systems, according to AMD.

Based on the new AMD Athlon Neo processor with ATI (Nasdaq: ATYT) Radeon X1250 integrated graphics and an optional ATI Mobility Radeon HD 3410 discrete graphics card , the platform is scheduled to make its debut in the HP Pavillion dv2 Entertainment Notebook PC ultra thin, a less-than-1-inch-thick notebook. The machine includes a 12.1-inch diagonal LED BrightView display, a nearly full-size keyboard and an optional external optical disc drive with Blu-ray capability.

"This is a bit of a reaction to [the Yukon]. Intel's entry into any market segment is not good news for its competitors," Peddie noted.

Rumor Mills Buzz Over Qualcomm-Chipped iPhone Nano

Macworld might be the place where consumers get a first look at a smaller version of the iPhone. Two accessory makers have briefly listed cases for such a device on their Web sites, and expectations have been growing ever since. The rumor on top of that rumor is that Qualcomm, not Infineon, might supply the chips for an iPhone nano.

Quallcomm (Nasdaq: QCOM) Chief Executive Paul Jacobs generally has the latest and greatest cell phones. But he's never owned the uber-trendy Apple (Nasdaq: AAPL) iPhone.

"Not until they put a Qualcomm chip in it," Jacobs said in a September interview.

It could soon be time for Jacobs' first Apple phone. The company is widely rumored to be planning an iPhone nano, a smaller touchscreen version of its popular phone. One industry analyst says it will run on Quallcomm chips.

Deal on the Way?

The weeks leading up to the annual Macworld conference are typically filled with rumors of expected product announcements. This year, there has been much speculation in advance of Macworld that Apple will announce a smaller version of the iPhone, dubbed the "iPhone nano" by bloggers.

Two iPhone accessory manufacturers,

Deal on the Way?

The weeks leading up to the annual Macworld conference are typically filled with rumors of expected product announcements. This year, there has been much speculation in advance of Macworld that Apple will announce a smaller version of the iPhone, dubbed the "iPhone nano" by bloggers.

Two iPhone accessory manufacturers, Vaja andXskn, briefly listed protective cases for the iPhone nano on their Web sites. Both companies have removed those listings.

Further fueling the rumors, Friedman, Billings, Ramsey Group analyst Craig Berger said in a report Wednesday that industry sources told him there will be a smaller version of the iPhone in the second half of the year and it will "apparently" run on a Qualcomm chip.

Qualcomm declined to comment, but industry observers say there's no question that Qualcomm would love to add Apple to its list of customers.

"It would be a big deal for them," said semiconductor industry analyst Will Strauss of Arizona-based Forward Concepts . "I've heard nothing credible at this point from Qualcomm or others. But there's no doubt that Qualcomm has been knocking on (Apple CEO) Steve Jobs' door for a long time."

Strauss said that in the competitive phone chip business, Qualcomm recently added Taiwanese manufacturer HTC as a customer, a deal that led to a Qualcomm chip inside the first Google(Nasdaq: GOOG) Android phone. But Qualcomm lost some of its business with key customer Samsung when the company recently said it would buy some chips from competitors Broadcom (Nasdaq: BRCM) and Infineon.

Business with Apple, which currently buys iPhone chips exclusively from Infineon, could help Qualcomm maintain its status as the top wireless chipmaker.

The Fragmented Approach

Strauss questioned the logic of a nano version of the touchscreen phone, which would not be as good at Web browsing with a smaller screen.

"The trend seems to be toward bigger screens, not smaller," he said.

Others say it's likely that Apple will follow a game plan that worked with the iPod music player: multiple products aimed at various market segments.

"With the iPod, Apple had a fragmented approach, with different devices, features and price points," said Michael Gartenberg, vice president of mobile strategy for Jupitermedia. "It makes sense that they would do the same thing with the iPhone."

Apple fans tend to circulate a lot of rumors. Some hit the target. Some miss. The iPhone was rumored for years before it materialized, Gartenberg said.

On the other hand, first word on the supposed nano leaked from manufacturers of cases, which lends credence to this year's rumor, he said.

"I'm not going to try and predict what they'll announce next week or next month," Gartenberg said. "I do think it (a lower-priced iPhone) would make a lot of sense in the current economic slowdown."

and Xskn, briefly listed protective cases for the iPhone nano on their Web sites. Both companies have removed those listings.

Further fueling the rumors, Friedman, Billings, Ramsey Group analyst Craig Berger said in a report Wednesday that industry sources told him there will be a smaller version of the iPhone in the second half of the year and it will "apparently" run on a Qualcomm chip.

Qualcomm declined to comment, but industry observers say there's no question that Qualcomm would love to add Apple to its list of customers.

"It would be a big deal for them," said semiconductor industry analyst Will Strauss of Arizona-based Forward Concepts . "I've heard nothing credible at this point from Qualcomm or others. But there's no doubt that Qualcomm has been knocking on (Apple CEO) Steve Jobs' door for a long time."

Strauss said that in the competitive phone chip business, Qualcomm recently added Taiwanese manufacturer HTC as a customer, a deal that led to a Qualcomm chip inside the first Google (Nasdaq: GOOG) Android phone. But Qualcomm lost some of its business with key customer Samsung when the company recently said it would buy some chips from competitors Broadcom(Nasdaq: BRCM) and Infineon.

Business with Apple, which currently buys iPhone chips exclusively from Infineon, could help Qualcomm maintain its status as the top wireless chipmaker.

The Fragmented Approach

Strauss questioned the logic of a nano version of the touchscreen phone, which would not be as good at Web browsing with a smaller screen.

"The trend seems to be toward bigger screens, not smaller," he said.

Others say it's likely that Apple will follow a game plan that worked with the iPod music player: multiple products aimed at various market segments.

"With the iPod, Apple had a fragmented approach, with different devices, features and price points," said Michael Gartenberg, vice president of mobile strategy for Jupitermedia. "It makes sense that they would do the same thing with the iPhone."

Apple fans tend to circulate a lot of rumors. Some hit the target. Some miss. The iPhone was rumored for years before it materialized, Gartenberg said.

On the other hand, first word on the supposed nano leaked from manufacturers of cases, which lends credence to this year's rumor, he said.

"I'm not going to try and predict what they'll announce next week or next month," Gartenberg said. "I do think it (a lower-priced iPhone) would make a lot of sense in the current economic slowdown."

AMD Aims to Smash Petaflop Barrier With Graphics Supercomputer

AMD is working on a supercomputer that will do much of the graphics processing for you, rather than delivering raw data that is then rendered at the client side. The AMD Fusion Render Cloud will render graphics, then compress and deliver them, the company said, saving processing power and battery life.

AMD (NYSE: AMD) is working with leading software and content developer Otoy to develop and deploy applications, high-definition (HD) content and even games in the cloud using a massively parallel supercomputer.

Details of the AMD Fusion Render Cloud were unveiled at the Consumer Electronics Show in Las Vegas during a keynote by AMD president and chief executive Dirk Meyer, along with Otoy chief executive Jules Urbach and spokespeople from Lucasfilm, Dell(Nasdaq: DELL) , HP (NYSE: HPQ) and Electronic Arts (Nasdaq: ERTS) .

Seasoned Veteran

"AMD has a long track record in the supercomputing world. Seven out of 10 of the world's fastest machines, including the fastest two computers on the planet, are powered by AMD hardware," said Meyer.

"Today, AMD is pleased to announce a new kind of supercomputer unlike any other ever built. It is being designed to break the one petaflop barrier, and to process a million compute threads across more than 1,000 graphics processors."

Meyer claimed that the AMD Fusion Render Cloud will be the fastest graphics supercomputer ever built, and will be ready in the latter half of 2009.

"It will be powered by Otoy's software for a singular purpose: to make HD cloud computing a reality," he added.

Render First, Deliver Second

The system aims to use server-side rendering to allow content providers to deliver PC applications, video games and other graphics-intensive applications to virtually any type of mobile devices with a Web browser, without killing battery life and alleviating the need for powerful client-side processors.

Once rendered and stored in this cloud environment, the data can be compressed and streamed in real time over a wireless or broadband connection to devices such as smartphones, set-top boxes and ultra-thin notebooks.

"By fusing industry leading CPU technology with computationally dense, massively parallel graphics processors, the AMD Fusion Render Cloud can rival the world's most powerful industrial computing devices, but requires just a fraction of the floor space, power envelope and cost associated with many of today's leading supercomputers," said Urbach.

The AMD Fusion Render Cloud will be powered by AMD-optimized hardware including the newly announced AMD Phenom II processors, AMD 790 chipsets and ATI (Nasdaq: ATYT) Radeon HD 4870 graphics processors, while Otoy will provide technical software development and a middleware layer.

Breaking Bottlenecks

"The AMD Fusion Render Cloud will allow directors like Robert Rodriguez of Troublemaker Studios to break through existing CPU-only and graphics processor-only render bottlenecks which have imposed limitations on the creation of true HD assets," said Charlie Boswell, director of digital media and entertainment at AMD.

"Imagine watching a movie halfway through on your cell phone while on the bus home, then switching over to your HD TV and continuing to watch the same movie from exactly where you left off, seamlessly and at full-screen resolution.

"Imagine playing the most visually intensive first-person shooter game at the highest image quality settings on your cell phone without ever having to download and install the software, or use up valuable storage space or battery life with compute-intensive tasks.

"Those are just some of the experiences that AMD and Otoy plan to make possible with HD cloud computing of visually rich entertainment content."