Intel Touts Progress In Server Chips, Hedges On Economic Growth

The tempered optimism comes as Intel enacts dramatic price cuts throughout its Pentium and Xeon chip lines. The vendor moved last week to slash some Pentium 4 processor price tags by as much as 25 percent.

Solution providers welcomed the cuts but said component availability problems could dilute their impact.

"Next month should be better, and June it should come back a little stronger," said David Chang, president of Agama Systems, a Houston-based system builder and Intel channel partner. "August should be much, much better."

Chang, whose business has topped $100 million in annual white-box sales, said Intel has not shared its forecast with him and his comments are based on his own outlook.

Despite Chang's hopes for growth for later this summer, he said he believes the current quarter will be tough to get through, and "so far April is the worst month of the year."

Another solution provider, who asked not to be named, said Intel representatives told him the chip maker is preparing for a soft second quarter but expects a steady uptick in sales in the third and fourth quarter.

Intel executives declined to issue a growth forecast when pressed by financial analysts during a call last week to discuss its first-quarter earnings. However, the executives said sales should be in line with "seasonal" patterns that Intel has seen in the past.

On the call, Intel CFO Andy Bryant said the company had recorded better-than-expected first-quarter sales for its Intel Architecture Group, which ships Pentium 4 processors.

"Results from the Intel architecture business were a little better than seasonally typical," Bryant said.

Intel President Paul Otellini said the "first quarter came in about as we expected," and server revenue rose in the quarter.

Looking ahead, Otellini said Intel plans to roll out new mobile Pentium 4 processors with higher clockspeeds during the second quarter.