New York:
That most elusive object of the workplace during the recent recession-racked years, the new personal computer, is being spotted with increased regularity.
Some of the best evidence that companies are spending again: on Tuesday, Intel, the world's largest computer chip maker, reported record sales during its second quarter. The company also predicted that sales in its third quarter would end up far better than expected, as large companies had finally started to buy new PCs.
"We see clear signs that the corporate market for PCs is strengthening," said Stacy J. Smith, the chief financial officer at Intel, during an interview.
In the second quarter, ended June 26, Intel's net income rose to $2.89 billion, or 51 cents a share, in contrast to a loss of $398 million, or 7 cents a share, in the quarter a year ago that included charges tied to a fine paid to the European Commission.
Intel's revenue rose 34 percent, to $10.77 billion, from the $8.02 billion reported in the quarter a year ago. Analysts surveyed by Thomson Reuters had expected earnings of 43 cents a share on revenue of $10.25 billion.
Shares of Intel jumped 7 percent in after-hours trading. They had ended regular trading Tuesday at $21, up 44 cents, or 2.09 percent.
Paul S. Otellini, the chief executive of Intel, hailed the quarter as the best in Intel's 42-year history in his remarks to Wall Street analysts.
Intel also said it expected revenue in the current quarter of $11.2 billion to $12 billion, surpassing analysts' forecasts of $10.92 billion.
Over the last three years, the dominant companies in the PC industry have faced a constant stream of disappointment as their largest corporate customers put off replacing computers. A generation of faster chips, new software and bigger hard drives came and went with disappointing sales, as the big corporate buyers gave up on their tradition of replacing two-year-old machines.
These companies, executives in the technology industry contended, could not survive forever on their old machines. And, at long last, it seems that the technology sector has worn down the resolve of big business.
Smith said that Intel first caught whiffs of corporate interest in PC upgrades about nine months ago and that the signals had grown stronger with each passing quarter. Over the last three months, Intel noted a particular spike in PC sales to large customers and in sales of its computer server chips that go into data centers, Smith said.
"It does seem like the long-awaited upgrade cycle is starting to manifest itself a little bit," said Michael McConnell, an analyst with Pacific Crest Securities.
In the last 18 months, Intel's fortunes have undergone a profound shift. The company was one of the first to feel the brunt of the recession and a global clampdown on technology spending. As a result, its sales plummeted at record rates. But it was also one of the first technology companies to benefit from renewed consumer interest in computers, specifically laptops, and its results so far this year have reflected this enthusiasm for new machines.
Wall Street analysts, however, have been waiting and waiting for companies sitting on four- and five-year-old computers to begin upgrading their machines as well. Such purchases could provide an even bigger boost to the fortunes of Intel, Microsoft, Dell and Hewlett-Packard, since businesses tend to buy more expensive computers.
"The corporate refresh has been the million-dollar question," said Stacy A. Rasgon, an analyst with Sanford C. Bernstein & Company.
Rasgon added that investors had been cautious when it came to technology companies because they feared that the economy could experience another slump and that the increased recent demand for technology products would vanish. "People are worried about Europe, austerity measures and whether China will slow down," he said.
Still, analysts said that Intel could withstand some amount of broader economic turmoil better than some of its peers. The company made one of the smoothest transitions in its history to a set of new chip manufacturing plants, allowing it to produce faster chips at a lower cost.
In addition, it has seen diverse demand for its laptop, desktop and server chips, which has helped keep its prices up and the plants humming, said Craig A. Ellis, an analyst at Caris & Company. "Intel is executing very well in a wide array of areas," he said.
Intel continues to face investor doubts about its long-term prospects. Executives at Intel have maintained that the PC industry has plenty of life left as a growth market, especially as developing countries begin buying large quantities of computers. Investors, however, have yet to buy into this vision.
In addition, there's skepticism about Intel's ability to crack new markets like those for chips in smartphones, televisions and electronics.
"I think people are really skeptical about their long-term growth," Mr. Rasgon said. "You sort of have to believe they are a fundamentally different company than they have been over the past 10 years or so," he said.