The other side: Hardware revenue should be up

As the weather heats up in the Northern Hemisphere, revenue from IT hardware tends to cool off. Despite a slew of recent earnings warnings from their software counterparts, the IT hardware industry should improve on last year's second quarter amid the usual seasonal slowdown, according to analysts.

This week, Intel, Advanced Micro Devices (AMD), Apple and IBM will report quarterly earnings. Sun and Gateway will post their latest financial data in two weeks. Dell and HP are on different fiscal cycles from the rest of the industry and won't report earnings for another month.

In terms of revenue, Intel and AMD are expected to show normal seasonal downturns but healthy increases compared with last year's second quarter. Consumers typically take a break from buying PCs in the second quarter, and shipments are expected to plunge about 18% from the first quarter of this year to the second quarter, says Roger Kay, vice president of client computing for IDC.

However, the second quarter is generally strong for enterprise hardware purchasing. Government and educational customers tend to lift commercial shipments in the second quarter, Kay says.

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As the weather heats up in the Northern Hemisphere, revenue from IT hardware tends to cool off. Despite a slew of recent earnings warnings from their software counterparts, the IT hardware industry should improve on last year's second quarter amid the usual seasonal slowdown, according to analysts.

This week, Intel, Advanced Micro Devices (AMD), Apple and IBM will report quarterly earnings. Sun and Gateway will post their latest financial data in two weeks. Dell and HP are on different fiscal cycles from the rest of the industry and won't report earnings for another month.

In terms of revenue, Intel and AMD are expected to show normal seasonal downturns but healthy increases compared with last year's second quarter. Consumers typically take a break from buying PCs in the second quarter, and shipments are expected to plunge about 18% from the first quarter of this year to the second quarter, says Roger Kay, vice president of client computing for IDC.

However, the second quarter is generally strong for enterprise hardware purchasing. Government and educational customers tend to lift commercial shipments in the second quarter, Kay says.

Strong iPod sales should give Apple another strong quarter, says Steven Milunovich, global technology strategist at Merrill. Any future impact felt from the recent suspension of iMac orders should be offset by the introduction of the iPod Mini in Europe and the launch of HP's iPod product line in the third quarter, he said.

The second-quarter picture appears rosier for Sun for the first time in a while, based on strong sales of the Sun Fire V1280 and E2900 midrange servers, Milunovich says. Merrill raised its estimates for Sun's second-quarter revenue, but still expects the company to post a loss, he says.

IBM's microelectronics division should return to profitability in the second quarter, as the company makes good on its promises to fix the yield problems that plagued the introduction of the 90nm PowerPC 970FX earlier this year, Milunovich says. Merrill expects the company to meet expectations for the quarter.

The IDG News Service is a Network World affiliate.