Intel posts a decent 25% profit
Intel Corp., the world’s biggest chipmaker, reported a 25 percent increase in second-quarter profit after demand grew worldwide for personal-computer processors. Net income climbed to $1.6 billion, sales gained 9.1 percent to $9.47 billion.Chief Financial Officer Stacy Smith said he’s seeing strong demand globally and hasn’t felt any impact from a slowing U.S. economy. The outlook signals that technology may be holding up better than housing and financial markets. Intel also expects shipments of more-profitable laptop processors to overtake those of desktop-computer chips for the first time this year. This is a very important milestone.
Chief Executive Officer Paul Otellini sped up the introduction of new products last year, helping the company win market share from Advanced Micro Devices Inc., Intel’s only remaining competitor in computer processors. Otellini, is now focusing on returning to double-digit sales growth by expanding outside the PC chip market.
Intel, whose results serve as a bellwether for computer demand, ushered in earnings season for U.S. technology companies. Microsoft Corp., International Business Machines Corp., Google Inc. and AMD will report results on July 17. So far this year, Intel shares have fallen 22 percent, compared with a 15 percent decline in the Philadelphia Semiconductor Index. Computer disk-drive maker Seagate Technology also reported results on Tuesday: its quarterly profit fell 70 percent amid an inventory overhang, and its shares fell 9 percent. Programmable chipmaker Altera Corp said its second-quarter profit rose on stronger sales, higher gross margin and lower costs. Its shares rose 7.5 percent.
Shipments of notebook processors rose about 5 percent from the first quarter, Intel released an updated design of its best- selling Centrino notebook chips yesterday to fuel demand this quarter.
The Intel division that makes memory chips and other semiconductors had an operating loss of $706 million last quarter on sales of $300 million. The memory business formed a joint venture to produce so- called Nand flash memory with Micron Technology Inc. The operation is suffering from a glut of the products, which store data in mobile devices such as Apple Inc.’s iPhone. Prices of flash chips fell as much as 20 percent in June. Intel expects price declines to continue for the rest of this year. Otellini also is trying to win sales in the mobile-device market with a new chip called Atom. It’s designed to power future smart phones such as the iPhone and Research In Motion Ltd.’s BlackBerry.
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