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Thu, Jul 16, 2009 - Page 10 News List

Intel shares soar on optimistic outlook

‘IT’S GREAT NEWS’ Sales for the US chipmaker for the first quarter were down 15 percent to US$8.02, beating analyst expectations by a little less than US$1 billion


Intel Corp offered support on Tuesday for its assertion that the computer business is rebounding, even as other parts of the industry throw out mixed signals. Intel’s results and outlook were much better than analysts’ subdued estimates, sending its shares up 7 percent after hours.

In the quarter that ended on June 27, the chip maker posted sales and profit that breezed past Wall Street’s forecasts — though investors had to overlook a US$1.45 billion antitrust fine from the EU. The fine, which Intel had to pay while it is appealing the case, gave the world’s biggest semiconductor company its first quarterly net loss since 1986.

Intel earned US$1 billion, or US$0.18 per share, in the second quarter, excluding the EU fine. On that basis, analysts expected a profit of US$0.08 per share, Thomson Reuters said.

Including the fine, Intel lost US$398 million, or US$0.07 per share. In the same quarter last year, its profit was US$1.6 billion, or US$0.28 per share.

Sales fell 15 percent to US$8.02 billion in the most recent quarter. Analysts had predicted US$7.28 billion.

“I’m in shock — it’s great news,” said Kevin Cassidy, a semiconductor analyst at Thomas Weisel Partners. “It’s just amazing the market can snap back this quickly. The question is, is it sustainable?”

Intel chief financial officer Stacy Smith said the results reflected “a combination of strengthening end demand and a partial replenishment of the worldwide supply chain.”

The company’s numbers are closely watched because they reflect the health of the computer market and technology spending in general.

Interest in the second-quarter numbers was particularly acute because CEO Paul Otellini predicted in April that PC sales had “bottomed out” after their worst holiday season in six years.

Global PC shipments this year are expected to fall for the first time since the dot-com meltdown in 2001, the iSuppli Corp research firm said.

Yet analysts said that Intel’s numbers on Tuesday showed that the industry was not in as dire shape as it appeared just months ago.

“How can we not be happy? I think they did a tremendous job,” said Leslie Fiering, a research vice president at Gartner Inc.

“It has to inspire some confidence in the market ... There is uncertainty in this market, but we’re seeing improvement, and it beats the alternative,” he said.

Intel offered a third-quarter sales outlook of US$8.5 billion, plus or minus US$400 million, which is significantly better than the US$7.8 billion average estimate of analysts polled by Thomson Reuters.

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