Intel Corp posted first-quarter earnings and revenues in line with analysts' expectations Tuesday, indicating the chip-making giant has moved beyond the tech downturn's low point.
Though sales of microprocessors were stronger than expected and business overall is stable, the company has yet to see a return of strong sales growth, said Andy Bryant, Intel's chief financial officer.
"What we're seeing right now is seasonality," Bryant said. "We are not seeing any kind of recovery yet."
For the three months ended March 30, Intel earned US$936 million, or US$0.14 a share, compared with profits of US$485 million, or US$0.07 per share, in the same period last year.
The sharp increase was largely due to the adoption of new accounting rules regarding acquisitions.
Excluding one-time items, the chip maker earned US$1 billion, or US$0.15 a share, compared with US$1.1 billion, or US$0.16 a share, in the first quarter of last year.
First-quarter sales were US$6.8 billion -- a 2 percent increase over last year's first-quarter revenues of US$6.7 billion.
Analysts were expecting profits of US$0.15 per share on revenues of US$6.79 billion, according to a survey by Thomson Financial/First Call.
The company also took a US$155 million charge related to the settlement of a long-running patent dispute with Intergraph Corp. The charge reduced first-quarter earnings by about a penny per share.
Excluding the effects of the settlement, Intel's growth margin would have been 53.6 percent, several percentage points higher than the company's earlier estimates. Including the settlement, it was 51.3 percent, or flat with the fourth quarter.
Bryant attributed the gain to increased average selling prices, better product mixes and improved factory efficiency.
* First-quarter sales were US$6.8 billion -- a 2 percent increase over last year's first-quarter revenues of US$6.7 billion.
* Second-quarter revenues are expected to range between US$6.4 billion to US$7 billion.
* Intel's margin was 51.3 percent, or flat with the fourth quarter. For the second quarter, gross margin is expected to be 53 percent.
"It looks like they'll be able to generate higher earnings on a lower revenue streams," said Eric Rothdeutsch, an analyst at Robertson Stephens.
Bryant said second-quarter revenues are expected be in the range of US$6.4 billion to US$7 billion, with gross margin to be about 53 percent.
Like other semiconductor companies, Intel was hit hard by the tech downturn that popped the Internet bubble, crashed the telecom industry and led to a decline in personal computer sales.
Intel did not resort to massive layoffs and continued to pump billions of dollars into research and development. On April 2, the company unveiled a 2.4 gigahertz Pentium 4, its fastest yet.
Intel hopes to reap returns on new technologies that not only boost performance of its chips but also make the process more efficient and profitable.
"Intel's aggressive R&D and manufacturing investments paid off in the first quarter, helping our product mix and profitability in a generally soft environment," said Craig R. Barrett, Intel's chief executive.
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