The "depression" has been great for Intel

[DCBob]

Intel posts biggest profit in a decade, raises forecast

SAN FRANCISCO — Intel Corp. has booked its largest quarterly net income in a decade as the chipmaker benefits from a stronger computer market and more sophisticated factories. Large corporations bought more computers that use Intel's most expensive chips, an encouraging sign for the economy that emerged from Intel's second-quarter numbers, reported Tuesday after the stock market closed. Corporations have been stingy on upgrading their workers' personal computers, a trend Intel is now seeing reverse. Intel gets most of its profit from the sale of chips that go into PCs.

Intel CEO Paul Otellini said companies are starting to replace 4- and 5-year-old PCs now that they have some "breathing room in the economy and their budgets." Intel has unique insight because it owns 80% of the worldwide market for microprocessors, the "brains" of PCs and servers.

The numbers offer further evidence that companies are freeing their technology budgets, which should have helped other big technology companies. Intel's main rival, Advanced Micro Devices Inc., reports its quarterly results on Thursday, while IBM Corp. and Microsoft Corp. issue their numbers next week.

http://www.usatoday.com/money/companies/earnings/2010-07-13-intel_N.htm

This is a sign that companies are beginning to invest in growth which should translate into hiring... eventually.

[girl gone mad]

1. Monopolies do well in any economic environment.

It's the political upheavals they have to worry about.

[DCBob]

2. Not really.. even "monopolies" nearly went out business last year.

But yes, they do worry about political upheavals.. we all should.

[girl gone mad]

7. Intel was nowhere close to going out of business.

What planet do you live on?

[DCBob]

10. Many companies were..

what galaxy are you from?

[KeyWester]

3. Sliding deeper into recovery

[DCBob]

4. while in the midst of a depression..

Wonder what Krugman's next op-ed will be about?

[fasttense]

5. Corporations are upgrading 4 and 5 year old computers?

Damn, that's pretty slow. When I use to run a computer based office, I would do some amount of upgrading every year. There would be at least one totally new system in the office and most of the others were not older than 3 years old. I had a competitor laugh at me for my 3 year old systems.

I'm wondering if this isn't just pent up demand. The corporations have put off upgrading for as long as they can and now have no choice but to upgrade or lose business.

[DCBob]

6. No doubt some of it is pent up demand..

But I suspect its much more than that.

[trotsky]

8. It's so much easier to run with old hardware these days.

Processing power isn't the bottleneck anymore - at least for the vast majority of users. It's RAM and disk, which can be cheaply and easily upgraded if necessary.

Where I work, we replace most of our systems after 3 years but that's only because the warranty runs out then and we don't want to be on the hook for repairs to the LCD. Desktops, heck, we've got a bunch of them that are 4-5 years and going strong.

[zipplewrath]

9. Exactly what it is

As you suggest, 3 year cycles are more the norm, often because of software upgrade demands. Companies delayed upgrades towards 5 years trying to get through the recession. But ultimately they get pressured by business realities to move forward. Good in the short run, but it can create a false sense of "growth". It is more like a case of a "surge". We saw something like it in the '90s. People were purchasing huge amounts of IT infrastructure out of a disproportionate concern about Y2K. But by '99 everyone had done complete upgrades and the demand started to slide down hard. We'll see a couple of years here of companies being forced to upgrade, and then they'll get back into their normal 3 year cycles. A modified boom and bust (it's not a bust, just a large scale reduction).

Of the many opportunities missed after 9/11, one of the more microscopic ones was in the "rebuilding" of the WTC site. A more visionary administration would have realized that it was an economic opportunity to create the "work place of tomorrow". They could have built a campus of buildings around the absolute latest in techonology. Think of a completely "wireless" building, right down to light switches. They could have built essentially a "smart grid" for the campus, managing power for the maximum in efficiency. It could have been the cutting edge of information technology with access to all manner of information on an immediate basis, including some of the most mundane information about subway congestion and elevator movement. They could have installed "active" insulation that responded to the suns movement. Power collection devices that used ambient sunlight, artificial light, and general radio wave energy to sustain wireless sensors in the building. RFID systems could have been used to track and find everything from equipment to people. And it could have been the basis for basically an entirely new information management industry that would have spread across the country and the world.

Instead the place still stands empty and is a big hole in the ground.

[Statistical]

11. Many companies put off IT upgrades.

Enterprise cap-ex spending is increasing mainly because companies have little choice.

Cap-ex was put off for a couple years, 2001 was going to be a big cycle but Sept 11 changed that. Companies put it off for "a couple more years". Vista launch was a disaster so companies put it off for a couple more years. Then the great recession hit so companies put it off "a couple more years". In some instances they are now running on servers originally planned to be upgraded a decade ago.

This is reflecting in Intel & Microsoft bottom line. A decade of pent up demand.