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The darkest time in the personal computer industry’s history may have ended.
Over the past few months, hardware makers like Intel, Hewlett-Packard and Dell have suffered as one-fifth to one-quarter of their computer sales vanished. For the first time ever, Microsoft, the world’s largest PC software company, experienced a drop in sales of its Windows software and carried out large-scale layoffs. As a result, analysts had predicted that computer sales would suffer a drop four times greater than that during the dot-com bust, the previous low-water mark.But now there are signs that companies tied to the PC industry may stop setting unwelcome records.
On Tuesday, Intel, based in Santa Clara, Calif., reported second-quarter sales of $8 billion for the quarter ended June 30. While that was a far cry from the $9.5 billion it posted in the same period last year, it beat analysts’ expectations by $700 million.
And for the first time since the recession hit, Intel felt comfortable enough to provide a forecast for its current quarter, saying it expects revenue of between $8.1 billion and $8.9 billion. Analysts polled by Thomson Reuters forecast earlier that Intel would post revenue of $7.8 billion this quarter.
“Our second-quarter results were clearly better than we expected,” said Paul S. Otellini, Intel’s chief executive, during a conference call with analysts.
In April, Mr. Otellini declared that he thought the PC slump had reached bottom, and the company’s recent financial results appear to confirm this.
As the world’s largest chip maker, Intel helps set the pace for the computing industry. For that reason, analysts keep a close eye on the company’s take on the overall market. Increases in the sales of Intel’s chips tend to translate into higher computer sales for H.P., Dell and others down the road.
Intel has warned that businesses remain cautious about purchasing new PCs given the still-limping global economy. Consumers have been the ones who are proving more willing to purchase new computers, particularly laptops and their diminutive, low-cost cousins, netbooks.
“We saw strengthening through June,” said Stacy J. Smith, the chief financial officer at Intel, during an interview. Intel expects the rising demand to carry over into the second half of this year.
Mr. Smith added that sales in Asia had picked up, particularly in China, and that sales in the United States were solid. Overall, however, the immediate fiscal conditions remain sobering for Intel.
During its second quarter, Intel’s net income fell to $1.0 billion from the $1.6 billion it reported during the same period last year. Intel earned 18 cents a share, down from 28 cents, beating analyst estimates by 10 cents.
Those figures exclude charges tied to a $1.45 billion fine levied against Intel by the European Commission for anticompetitive practices in the PC market. With the fine included, Intel posted a loss of $398 million, or 7 cents a share.
Still, Intel reported higher-than-expected gross margins and a quarter-to-quarter rise in sales of chips, boosted by healthier sales of laptop chips.
“I would say the worst is behind us,” said Srini Pajjuri, an analyst at Calyon Securities. But he warned that Intel’s strong results appeared to have come on the back of retailers and other sellers restocking in anticipation of higher demand in the coming months. For there to be a true PC recovery, those products will actually have to make their way into consumers’ hands.
“That’s the part we don’t know about,” Mr. Pajjuri said.
All of the major PC companies maintain hope that the release of Microsoft’s new version of its Windows software will coax businesses and consumers to upgrade their computers. Dubbed Windows 7, the software should hit the market in October.
“Hopefully, Windows 7 will be part of a catalyst,” said Steven A. Ballmer, Microsoft’s chief executive, during a speech Tuesday. “Maybe it will. Maybe it won’t.”
The PC doldrums have put intense pressure on some of the industry’s largest players. Dell, in particular, has had a steeper decline in sales than its main rivals H.P. and Acer because it is more dependent on PC shipments to business customers.
To bring its costs more in line with those of H.P. and Acer, Dell has spent much of the recession increasing its use of contract manufacturers to build its computers. That strategy runs counter to Dell’s traditional approach of producing PCs at its own factories.
“That stuff is behind us, and we have made those decisions,” said Brian T. Gladden, the chief financial officer at Dell, during a meeting Tuesday with analysts. “I think we have a path to do better here.”
Dell expects large businesses to begin upgrading their computers in the months to come. “Frankly, this PC refresh that we expect to happen will give us a nice path,” Mr. Gladden said.
Shares of Intel rose 2 percent to $16.83 ahead of the company’s earnings announcement. In after-hours trading, Intel’s stock jumped more than 7 percent to $18.04.
By ASHLEE VANCE
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