Worried that the ailing US economy has spilled abroad and hurt global PC sales, investors had subdued expectations for Intel Corp in the second quarter. Intel is the world’s largest computer chip maker and its fortunes rise and fall with swings in PC demand.
The Santa Clara, California-based company responded on Tuesday with a 25 percent jump in profit and record sales in the quarter, fueled by strong sales of processors for laptop computers.
The results easily beat analysts’ expectations and reassured Wall Street that Intel is weathering the dreary domestic economy thanks to its broad international reach, a robust product line-up and a manufacturing advantage over smaller rival Advanced Micro Devices Inc that lowers Intel’s cost of making chips.
Intel chief executive officer Paul Otellini said demand for Intel’s chips remains strong “in all segments and all parts of the globe.”
Three-quarters of Intel’s business is outside the US.
Intel shares rose US$0.23, or 1.1 percent, to US$20.94 in after-hours trading. They had risen US$0.24, or 1.2 percent, to US$20.71 in the regular session before Intel reported its results.
Intel said its net income was US$1.6 billion, or US$0.28 per share, in the three-month period ending June 28.
That was US$0.03 per share higher than what analysts surveyed by Thomson Financial expected. It was a 25 percent jump from the US$1.28 billion, or US$0.22 per share, that Intel earned a year ago.
Intel is profiting from surging global demand for laptops and the processors that power them, though lower prices for some of the fastest-growing models drove down Intel’s closely watched average selling price in the latest quarter.
However, Intel can absorb the trend easier than AMD because Intel has made a faster switch to a new manufacturing process that lowers the cost of making each chip.
Intel is the world’s No. 1 supplier of microprocessors, the electronic brains of personal computers. Intel commands about 80 percent of the market, with AMD owning roughly the other 20 percent.
The company was hurt in the second quarter by its investment in a type of memory called NOR flash, which is widely used in cellphones but isn’t as popular as another type of memory called NAND flash and used in gadgets like iPods and digital cameras. Intel said its revenues from NOR flash were “significantly lower” in the latest quarter.
Intel’s sales set a record at US$9.5 billion, up 9 percent over last year and US$150 million higher than analysts’ forecasts.
Further reassuring investors, Intel’s sales forecast for the current quarter was in line with Wall Street’s predictions.
Intel is projecting between US$10 billion and US$10.6 billion in sales for the third quarter.
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