Although PC sales slightly exceeded expectations in the first quarter and exacerbated component shortages, there's been little other good news. Worldwide shipments of desktops remain down from 2001 totals, which were themselves down from shipments seen in 2000. Revenue from servers worldwide declined 12.8 percent in the second quarter, according to Gartner. Sales of many tech products in the United States, Europe and Japan are off and revenue gains in growing markets such as China have even slowed a bit for some products. Intel, which makes about 83 percent of the PC processors in the world, AMD, and a number of PC makers reported revenue and earnings lower than original expectations for the second quarter. Intel's efforts to get into markets beyond the PC haven't much helped the company's bottom line. Both its communications and wireless groups have lost money for the past several quarters, and executives have said the outlook, especially in communications, isn't promising. Sean Maloney, senior vice president of the Intel Communications Group, has said that evidence is mounting that the Internet will suffer brownouts next year as Web traffic outpaces the installed carrier infrastructure. To remain competitive in tough times, Intel said it would trim around 4,000 jobs, about 5 percent of its total number of employees, and cut capital spending to a range of $5bn to $5.2bn. Earlier, the company said this year it would spend $5.5bn on plants and equipment. Although the bleak outlook is bad for businesses, it has benefited consumers. Prices on memory and flat-panel monitors have slid in recent months, prompting manufacturers to lower PC prices and increase rebates. Geographically, Intel has identified some bright spots. Sales in Europe, for a long time a lagging market and one that has been blamed for earnings shortfalls in the past, are ahead of expectations. Yet sales into Asia and Japan have fallen behind predictions. Meanwhile, sales in North and Latin America are meeting expectations.
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