Intel Corp’s first-quarter profit blew past Wall Street’s grim forecasts on Tuesday and the company claimed that personal computer sales “bottomed out” and have started recovering.
The optimistic comments were notable because Intel was the first technology company to report earnings for the first three months of this year. However, Intel let investors down by not giving specific revenue guidance. It’s not yet clear whether people are buying significantly more PCs, or whether Intel is mainly benefiting from computer makers replenishing their chip inventories, which had been whittled to low levels to save cash.
The Santa Clara, California-based company’s net income of US$647 million, or US$0.11 per share, was less than half what the company earned in the same period last year. But analysts polled by Thomson Reuters were expecting far worse, having forecast profit of just US$0.03 per share. Some analysts had even predicted Intel would lose money for the first time in nearly 25 years.
Intel’s sales of US$7.1 billion were down 26 percent from last year, but about US$100 million higher than estimates.
In a broad sense, Intel’s outlook was relatively upbeat, given the uncertainty about the length and depths of the recession.
“We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns,” Intel CEO Paul Otellini said in a statement.
Yet Intel said it was too hard to predict its financial results for the second quarter. The company would only offer that revenue would likely be flat from the first quarter and gross profit margin in the “mid-40s” as a percentage of revenue.
Intel’s gross margin in the first quarter was 45.6 percent. That was down from 53.1 percent in the fourth quarter — a sign that Intel is running its factories at less than full capacity to account for soft demand.
Analysts expected second-quarter revenue of US$7.01 billion, so Intel’s forecast was roughly in line with that. The first and second quarters are typically the toughest for chip companies. Back-to-school season and the holidays are usually boom times.
Meanwhile, Dutch computer chip equipment maker ASML yesterday announced net losses of 117 million euros (US$155 million) for the first quarter against a profit of 145 million euros for the same period last year.
Sales, which hit 184 million euros in the first quarter, were only a fifth of the figure for the same period last year.
The results were in line with the expectations of financial analysts surveyed by Dow Jones Newswires, who predicted an average loss of 115 million euros and sales of 190 million euros.
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