Intel CFO: Anecdotal Evidence Of Companies Starting To Spend
October 29 2009 - 12:43PM
Dow Jones News
Intel Corp. (INTC) Chief Financial Officer Stacy Smith said
anecdotal evidence is beginning to emerge that corporations are
returning to technology spending, although such spending is driven
more by the savings offered than by any spending increases.
"Our sales guys are picking up more interest at corporations,"
Smith told Dow Jones Newswires in an interview Thursday.
Conversations with customers, he said, are often focusing on the
value proposition inherent in upgrading to new computers and
servers.
Smith's comments came during a wide-ranging interview with the
chip industry veteran, who also discussed the economy, the Galleon
Group case and the company's progress in expanding to markets
outside of PCs.
"In general, what we see is that things are improving," Smith
said. The stimulus package in China has provided a direct boost to
the PC market because of the government's efforts to close the
digital divide among its population. And while the European market
isn't yet showing strength, the U.S. market appears to be
improving.
For Intel, the U.S. stimulus package will likely provide more of
an indirect benefit, he said, as more focused subsidies, such as
the "cash for clunkers" program and those targeted to homeowners,
leave more money in consumers' pockets to spend on PCs. Smith
continues to expect stimulus spending to peak next year.
Intel executives made some of the earliest statements declaring
that the worst was over for the semiconductor and PC markets, with
Chief Executive Paul Otellini telling investors in April that the
market had reached a "bottom."
But as Silicon Valley works to dig out of the recession, several
companies--including Intel--have been forced to investigate
allegations that employees had leaked non-public information in one
of the largest insider trading cases in history.
Earlier this month, Galleon Group founder Raj Rajaratnam and
five others were arrested and charged in a $20 million
insider-trading case. In addition to the hedge fund, the case has
ensnared numerous technology executives, including a current and
former employee of Intel, along with the former chief executive of
Intel's main rival, Advanced Micro Devices Inc. (AMD).
Intel has said previously that it was not aware of the alleged
insider trading, and has begun an investigation of its internal
policies. The company has not been implicated in any
wrong-doing.
"If it's true, it's a terrible crime, and there is no excuse for
it," Smith said, noting that the company has many controls in place
designed to prevent the dispersal of non-public information.
Intel has hired a law firm that specializes in reviewing
companies' internal controls to evaluate its policies. Smith added
that if the current allegations are accurate, there is likely
little more a company can do to prevent this type of leak.
"I'm doubtful, in terms of internal policy, we are going to
change anything," he said.
Earlier this week, The Wall Street Journal reported that Hector
Ruiz, the former AMD CEO, was the executive that allegedly leaked
information regarding the company's spin-off of its manufacturing
unit into a separate company. Smith said that if the allegations
are true, it would be "weird" for someone in such a high executive
position to be implicated in an insider-trading case.
Meanwhile, Smith noted the progress Intel has made diversifying
its product lines into new areas outside of PCs. Intel plans to
bring its Atom line of processors, currently running the vast
majority of netbooks, into smaller devices such as smartphones,
while also expanding its market share into other consumer
electronics, like Internet-connected televisions.
Netbooks have flown off the shelves over the past year as
consumers trade in bigger, more powerful laptops for the smaller,
Internet-focused machines.
When it comes to smartphones and other consumer devices, Smith
said that, as Intel reaches some of those markets beginning in
2010, growth will be "truly incremental," to its current markets.
Still, the pace of netbook adoption is probably not going to be
repeated.
"Do I expect it to be as fast as netbooks? No," Smith said.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155;
jerry.dicolo@dowjones.com