SAN FRANCISCO – If you’re looking for bargains on personal computers, bad news from the industry could be good for your pocketbook.

Computer makers are scrambling for ways to goose faltering consumer demand after a weak start to the back-to-school shopping season. That could mean deeper price cuts and other promotions beyond the incentives that the industry dangled in front of shoppers to lure them into stores during the worst of the recession.

The latest sign of trouble came Friday when Intel Corp. lowered its forecast for the third quarter, saying demand for consumer PCs has been weaker than expected.

Because Intel’s microprocessors are used in 80 percent of the world’s PCs, its forecast essentially speaks for the health of the entire PC industry. Plus, its orders are based on how many computers the world’s biggest PC makers expect to make in the coming months, so weak chip sales now could foreshadow weak results to come from those manufacturers.

Even before Intel announced the latest trouble, two leading PC makers — Hewlett-Packard Co. and Dell Inc. — raised red flags last week about what is normally a robust season for sales.

Dell’s chief financial officer, Brian Gladden, called the back-to-school shopping season "a little weaker than we would have expected." Todd Bradley, head of HP’s PC division, complained of "softness" in consumer laptops and said back-to-school shopping was off to a late start.

Barclays Capital analyst Ben Reitzes said another factor could cause PC makers to cut prices: In the past few months, the prices for parts such as hard disk drives and memory have fallen — to their lowest levels of the year in August. That gives PC makers the freedom to lower prices while maintaining profit margins.

"This component environment could potentially now allow companies to invest in more aggressive pricing to stimulate demand into next year," he wrote in a research note Friday.

Intel said it now expects revenue of $10.8 billion to $11.2 billion for the fiscal third quarter, which ends in September. That compares with a previous forecast of $11.2 billion to $12 billion. On average, analysts surveyed by Thomson Reuters had expected $11.5 billion.

Three-quarters of Intel’s revenue comes from its chips and other technologies for PCs. The forecast cut means that PC makers suddenly scaled back or canceled their orders with Intel during the quarter, reflecting the lower demand they’re bracing for in the coming months.

PCs already have low profit margins, and the recession squeezed them further by forcing price cuts to entice shoppers. The strategy worked, but dipping demand could mean that prices will fall even more.

Reitzes said the computer maker with the biggest potential for revenue growth in this market is Apple Inc., whose iPad is seen eating into laptop sales. PC makers such as HP, Dell and others, he said, face a different question in needing to balance aggressive pricing with generating profits.

Consumer spending on discounted computers was instrumental in helping buoy the industry over the past two years, while businesses cut way back.

That trend is now reversing.

Consumers aren’t spending on technology as freely as they were. Uncertainty about jobs is keeping their spending in check.

Meanwhile, businesses have freed their budgets a bit. It’s not necessarily because they’re more sanguine about their prospects. Upgrading technology makes financial sense: Maintaining old machines can be more expensive than buying new ones with more features.

But there are signs business spending is rocky as well.

John Chambers, CEO of Cisco Systems Inc., the world’s largest maker of computer networking gear and another important barometer of technology spending, said in early August that the company was seeing signs that the global economic recovery is slowing down. He said Cisco is getting "a large number of mixed signals" from customers about their spending plans.

Intel’s warning comes a month after the company reported its biggest quarterly profit in a decade.

But those results were fueled by a rebound in technology spending at corporations, many of which held off replacing older computers during the recession.

Intel’s downgrade to its guidance wasn’t entirely a surprise. Many investors simply didn’t believe that Intel would be able to hit the higher numbers because of signals from other PC-industry suppliers that PC sales were collapsing.

Those fears were the main reason why Intel’s stock has fallen about 13 percent since Intel issued its original guidance on July 13. The fall erased about $16 billion in shareholder wealth through Thursday’s close.

After the company released its revised outlook, the company’s shares rose 19 cents, or 1 percent, to close Friday at $18.37, amid a general lift on Wall Street.

Analyst Craig Berger with FBR Capital Markets said that PCs might be "just the first shoe to drop," and that troubles could spread to other chip-makers, such as those that focus on communications, industrial and automotive sectors. He added that Intel’s main rival, Advanced Micro Devices Inc., is also likely being hurt.

Intel is scheduled to report results on Oct. 12 and plans to update its fourth-quarter and full-year outlook then.

The company has benefited from a recovering PC market for about a year and half. In April 2009, Intel CEO Paul Otellini proclaimed that PC sales "bottomed out" and had started recovering — a forecast that even the major PC makers wouldn’t immediately get behind, but proved to be true.

Now, it appears the market is starting to dip again.

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AP Business Writer Andrew Vanacore contributed to this story from New York.

By Gabriel Madway and Alexei Oreskovic

SAN FRANCISCO |
Thu Aug 19, 2010 6:19pm EDT

SAN FRANCISCO – Digital video recording pioneer TiVo Inc. and cable television provider Cox Communications Inc. are making it easier for Cox subscribers who use TiVo’s DVR boxes to watch Cox’s on-demand video content.

The companies said Thursday that Cox’s video-on-demand library will become accessible on TiVo’s latest DVR, the TiVo Premiere, in Cox’s major markets, which includes Las Vegas and San Diego. The integration is expected early next year.

In the past, cable providers have not integrated their on-demand content with consumer DVR products such as those from TiVo, so watching on-demand movies or television shows from Cox and other companies has been a cumbersome process for TiVo users.

The agreement between the two companies aims to make this a more seamless process, allowing customers of both to use TiVo’s interface and search function to access Cox’s on-demand videos, as well as other television content.

It will work with new and existing TiVo Premieres. TiVo began selling the Premiere, which starts at $300, in March.

The companies also said that Cox will market TiVo Premiere by doing things such as offering free installation for subscribers who buy the boxes online or in bricks-and-mortar stores and promoting it on its website.

SAN FRANCISCO |
Mon Aug 9, 2010 9:24am EDT

SAN FRANCISCO – The woman at the center of the sexual harassment claim that forced the resignation of Hewlett-Packard Co. CEO Mark Hurd revealed her identity Sunday and said she is "surprised and saddened" that Hurd lost his job.

Jodie Fisher, 50, an actress and businesswoman, knew Hurd through her contract jobs with HP’s marketing department from 2007 to 2009. HP paid her up to $5,000 per event to greet people and make introductions among executives attending HP events that she helped organize.

Fisher echoed Hurd’s statement that the two never had a sexual relationship, but neither she nor her lawyer, celebrity attorney Gloria Allred, would discuss details of the harassment claim.

That claim set off the chain of events that led to the discovery of allegedly falsified expense reports for dinners Hurd had with Fisher and ended in Hurd’s forced resignation Friday from the world’s largest technology company.

Fisher acknowledged that she and Hurd have settled the matter. A person familiar with the case told The Associated Press that Hurd agreed to pay Fisher but would not reveal the size of the payment.

"I was surprised and saddened that Mark Hurd lost his job over this," Fisher said in a statement. "That was never my intention."

Allred, said Fisher is a single mother who is "focused on raising her young son."

Fisher has also worked as a saleswoman, an executive at a commercial real estate company, and as an actress. She appeared in some racy R-rated movies in her 30s and most recently was on a dating show called "Age of Love," in which women competed for the attention of tennis star Mark Philippoussis.

Hurd settled with Fisher on Thursday, a day before he resigned. The settlement did not involve a payment from HP, the person close to the case said.

This person, who spoke on a condition of anonymity, was not authorized to speak publicly about the issue.

The investigation by HP’s board of directors found that Hurd listed other people as his dinner partners on expense reports when he’d been out with Fisher. HP also claimed Hurd arranged for her to be paid for work she didn’t do.

There was only one instance in which that occurred, the person close to the case said, but it was for an event that was canceled at the last minute and that Fisher’s contract required that she would be paid unless an event was canceled 30 days in advance.

The amount of money in question wasn’t known.

Hurd, 53, insists they were legitimate business expenses. Hurd says the errors in the reports may have been entered unwittingly by an assistant, according to the person close to the case.

The company determined Hurd didn’t violate its sexual harassment policy but broke its rules of conduct and irreparably harmed his credibility and integrity.

Interim CEO Cathie Lesjak said during a conference call with reporters Sunday that investors and big customers she has spoken with have been "extremely supportive."

"They respect how we dealt with the situation with transparency and speed. The bottom line is, the HP brand is strong," she said. Under Hurd, HP spent more than $20 billion on acquisitions to transform itself from a computer and printer maker dependent on ink sales for profits to a well-rounded seller of hardware and lucrative business services.

Hurd, who spent 25 years at ATM maker NCR Corp. before coming to HP in April 2005, became a Wall Street darling. HP’s market value nearly doubled during his five years. HP’s stock fell nearly 10 percent to $41.85 in after-hours trading Friday, when the news was released.

"One thing happened in this company on Friday - that is the CEO left," Lesjak said Sunday. "The rest of the company did not change."