This year, Intel's PC business has done worse than the company had expected heading into the year. Indeed, it has twice lowered its financial guidance as its view of the PC market has weakened.
To recap, Intel had entered the year expecting that PC revenues would be down slightly as a result of flat unit shipments with mild average selling price reductions.
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However, the company's current expectation is that the PC market will see unit decline at a "high single digit" pace.
Even though Intel has already twice tempered its expectations for the PC market this year, there are still folks in the investment community that remain skeptical that the PC market won't deteriorate further before the year is out.
However, it would seem that the PC market is finally beginning to show signs of life, which should be welcome news to investors in Intel stock.
What are these signs of life? Analysts Chris Danely of Citigroup and David Wong of Wells Fargo both separately issued research notes (via Barron's) in which they both claim that PC builds at Taiwan-based contract manufacturers saw meaningful increases in PC builds during the month of August relative to what they saw in July.
Separately, online publication DigiTimes corroborated these reports, claiming that contract notebook PC manufacturers have "mostly seen their August revenues performing better than expected."
This seems to be in line with what Intel told investors to expectSo far, it seems as though things are playing out as Intel had told investors to expect with respect to PCs. Company executives told investors at it is expecting seasonal growth in revenue during the second half of 2015, and from these reports, it would seem that the company is on track to meet those expectations.
Will this momentum continue through the remainder of the year?In the aforementioned report from DigiTimes, the authors claim that PC contract manufacturers are "cautious about their September shipment performance" as said performance is viewed as a "key indicator" of how strong PC shipments will be during the final quarter of the year.
Intel is scheduled to report its third-quarter financial results -- and issue its guidance for the fourth quarter of the year -- on October 13, a little under a month from now. Investors should have a pretty clear picture of how the PC market is faring once Intel reports its financial results and management provides its usual industry commentary.
Potentially working in Intel's favor, as well as in the favor of the PC vendors, is that new systems will now ship with the vastly improved Windows 10 operating system as well as with Intel's new and improved Skylake processors.
However, even though the systems that will be on the shelves this year will be very clearly better than what was available last year, we'll just have to see if PC demand will continue to be (relatively) strong through the remainder of the year.
Will 2016 be a better year for PCs?Even if Intel delivers on its guidance of seasonal growth in PCs during the second half of the year, it's important to note that on a year-over-year basis, this is still a fairly sizable decline.
I suspect that things will be better for the PC market -- and, by extension, Intel's PC processor sales -- next year.
For one thing, Intel faced relatively difficult year-over-year comparisons in 2015 relative to 2014 levels as the latter year included the Windows XP end-of-life refresh cycle.
By way of contrast, the poor performance that Intel's PC business is set to turn in this year sets the bar much lower.
The article Finally, a Positve Sign for Intel's PC Chip Business originally appeared on Fool.com.
Ashraf Eassa owns shares of Intel. The Motley Fool owns and recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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