Signs of Life in the PC Chip Market

PC demand is on the rise. According to IDC, PC chip shipments grew in the first quarter over the same period last year, and typical seasonal decline from the fourth quarter was less than it has been in years past.

Though Q1 global shipments of microprocessors slipped 5.6 percent from Q4 due to seasonality, they grew 39 percent over the same quarter in 2009. And, as IDC analyst Shane Rau notes, that is good news indeed.

“PC processor shipments typically decline around seven to eight percent going from fourth quarter to first quarter,” Rau said in a statement. “A decline of 5.6 percent is modest and wouldn’t mean much by itself. However, after the huge rise in shipments we saw in the fourth quarter, it adds more credibility to market recovery and that the PC industry anticipates improvement in PC end demand in 2010.”

To that end, IDC is predicting PC processor unit growth of 15.1 percent for 2010, though it concedes that it could prove a conservative estimate. And that may well prove to be the case. Earlier this month Intel, the world’s largest PC chip maker, reported the highest first-quarter sales ever…

AOL’s Turnaround Isn’t Here Yet: Revenues Down 23 Percent

Web advertising is back, but not at AOL: The company says revenue declined 23 percent in the last quarter, with ad sales dropping by 19 percent.

The company reported earnings of 32 cents on revenue of $664 million. Add back one-time charges and you’d get earnings of 79 cents per share.

The Street was looking for revenue of $679 million, and I’ve seen “consensus” expectations for earnings all over the map — ranging from 34 cents a share (including restructuring charges) to 80 cents (which excludes the charges). The just-announced sale of ICQ doesn’t figure into the Q1 results, and won’t do so until Q3.

Here’s Citigroup analyst Mark Mahaney’s ever-helpful “cheat sheet” to assist you in interpreting the numbers (click to enlarge):

In the old days, you’d be able to say that AOL’s results helped you understand the Web advertising market, a la earlier numbers from Google (GOOG) and Yahoo (YHOO). But given that CEO Tim Armstrong is still rebuilding his company, that’s not the case here. While both Yahoo and Google showed significant revenue growth, AOL is still shrinking.

But Armstrong has had the job for a year, and didn’t start his overhaul in earnest until last summer. So he still has a grace period before investors expect to see results.

How much longer does he have? AOL’s public line is that there won’t be much movement until the end of 2010. But privately they concede that they’ll have to start impressing people this summer in order to justify expectations, which are surprisingly high — AOL shares are up by about 20 percent this year.

AOL’s earnings call starts at 10am eastern; I’ll check back with them then.