The chips are up and the economy's too?

Intel logo behind CEO Paul Otellini

TEXT OF STORY

Kai Ryssdal: Banks are making money, as we just said. So is Intel. The chip maker reported its best quarterly earnings in 10 years yesterday. Revenue was way up. Profit margins were up. So was its stock today, in what was a fairly tame overall market.

Marketplace's Steve Henn reports that good news for Intel may also be a good sign for the rest of us.


Steve Henn: During the dark days of the Great Recession, back when companies couldn't get credit and were hoarding cash, corporate technology budgets took a beating. So for the past few years, many workers have been making do with desk top machines that are well...

Craig Ellis: ...Very well seasoned, if you will.

Craig Ellis is an analyst at Caris & Company. Ellis say Intel's blockbuster earnings mean large corporations and even some small businesses are buying again, investing big in computing upgrades.

Ellis: This is very important, because capital spending had been one of the few bright spots in the economy.

Lynn Reaser is president of the National Association of Business Economists. Reaser says corporate spending on PCs and servers had been rising for a while...

Lynn Reaser: ...But we were beginning to fear that business confidence had dropped very sizably and that businesses would not keep spending.

In the past few months, financial turmoil in Europe and some pretty weak economic reports here had economists and investors talking about a double-dip recession this summer. But now economists and analysts like Ellis are looking ahead, waiting to see if other high tech firms like Microsoft and HP can imitate Intel.

Ellis: We're just heading into the reporting season for U.S. companies, so there will be a lot of signs in the next two to three weeks.

And Ellis says if earnings remain this strong any references to double dips this summer should be confined to ice cream cones and swimming pools.

From Silicon Valley, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...