Intel says worst of downturn is over after poor Q1 results

Chip manufacturer Intel says the personal computer...

Chip manufacturer Intel says the personal computer industry has passed the worst of the economic downturn based on recent market trends.

That is despite the fact that Intel reported a 26% drop in first quarter revenue and a 55% drop in net income compared with the same period in 2008.

"We are still sitting in a fragile global economic environment, but we have got three or four months of fairly good trending," Stacy Smith, chief financial officer at Intel told analysts.

This has given Intel the confidence to say that the worst is past, said Smith, and the company is expecting increased demand in the second half of the year.

However, Smith said the overall strength of the enterprise market is still uncertain.

"What we are seeing is that enterprise budgets are locked down pretty tight and CIOs are going to let their fleets age a bit until they get a little more clarity on what the economy looks like," he said.

Last month, Intel froze top management salaries and revamped its stock options to compensate staff who suffered from the firm's lower stock price as a result of the worsening industry market.

In January, Intel announced it would close two chip manufacturing plants and two test facilities by the end of the year, with up to 6,000 job losses expected.

The closures are part of plans to "align manufacturing capacity to current market conditions", the chip maker said.

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