Intel Corporation's Improved Guidance Is Not Helping Its Bottom Line

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Intel (NASDAQ: INTC  ) , a leading integrated-device manufacturer, has upgraded  its revenue guidance for the second quarter of 2014. In contrast, research firms like Gartner and IDC are projecting shrinking PC sales going forward. What, exactly, caused Intel's improved revenue guidance, considering the fact that the company generates more than 60% of its revenue from the shrinking PC industry?

Reasons for improved guidance

Several things can explain Intel's improved guidance. For instance, convertibles and laptop replacements are on the rise. At Computex Taiwan, several companies, including Hewlett-Packard, Dell, and ASUS, unveiled convertible PCs. Moreover, Microsoft's (NASDAQ: MSFT ) SurfacePro 3 has been increasing in popularity. The common thing among all of these convertibles is that they feature Intel's silicon.

OEMs seem interested in convertibles, indicating healthy future growth prospects for this segment of the industry. IDC tends to agree and projects that shipments of convertibles will rise to 27.4 million in 2018, compared to 9.9 million expected in 2014. Gartner has not yet provided projections, but has stated, "Tablet substitution of notebooks will start to dissipate from this year onward as consumers and businesses align the right device with the right usage pattern." Increasing productivity of convertible devices, thanks to Intel's leading-edge 14-nanometer process technology, combined with the ability of convertibles to be used as stand-alone tablets, is the reason behind the anticipated growth of convertibles.

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