Turnaround for Tech: Intel Reports its 'Best First Quarter Ever'

Intel (News - Alert) released its first quarter results today - saying it was the "best quarter ever." The chipmaker reports that it earned net income of $2.4 billion in 1Q 2010 - a massive jump from the $629 million it reported in 1Q 2009. Revenues jumped 44 percent to $10.3 billion, ahead of analysts' forecast for $9.8 billion.

The report underscores what analysts and researchers have been saying for months: That the tech industry appears poised for a major rebound in 2010.

More specifically the firm's 1Q report shows that corporate spending on personal computers is increasing. In particular companies are starting to invest again in laptops. This is a strong indicator of a turnaround for tech, since personal computers are typically the last thing companies invest in following a budget freeze. The general reason companies are starting to invest in technology again is because it is often less expensive than maintaining aging computers and systems.

The bad news for Intel, however, is that most companies are investing in PCs and laptops with older Intel chips, which are less profitable for the company.

Still, Intel appears to be extremely optimistic about 2010: 'The investments we're making in leading edge technology are delivering the most compelling product line-up in our history,' said Paul Otellini, Intel president and CEO in a release. 'These leadership products combined with growing worldwide demand and continued outstanding execution resulted in Intel's best first quarter ever. Looking forward, we're optimistic about our business as Intel products are designed into a variety of new and exciting segments.'

There have been numerous reports in the past two months which indicate that the tech industry, and in particular the communications industry, is starting to rebound from the global economic recession - this despite the fact that unemployment continues to hover around 9 percent.

Many US corporations appear to be ready to start investing again in software and systems that can improve their operations - and recent financial reports and earnings forecasts from other major tech firms such as Oracle, Red Hat and Adobe indicate that sales of enterprise technology products are rebounding.

A new study by Forrester (News - Alert) Research, "US and Global IT Market Outlook: Q1 2010," confirms the trend.

"The tech recovery has started in the US and around the world," the report states, adding that in the fourth quarter of 2009 "IT market indicators showed an end to declines, setting the stage for stronger growth in 2010."

The report predicts that the US IT market will grow by 8.4 percent, to $550 billion, in 2010, while the global IT market in US dollars will grow by 7.7 percent to $1.6 trillion.

"Computer equipment and software will be the strongest product categories, with PCs, peripherals, and storage equipment leading the computer category and operating system software and applications setting the pace for software," the report summary states. "Communications equipment purchases are looking up, especially for enterprise and small and medium-size business (SMB) buying. IT services will lag a bit, with systems integration project work waiting for licensed software purchases to rise. On an industry basis, US manufacturers, financial services firms, utilities, and healthcare will see the strongest growth in 2010."

Forrester predicts that the US and Asia Pacific "will be standout regions in local currency terms, while the stronger euro and European country debt concerns will keep Western and Central Europe expanding at the slowest rate among the regions."