Intel posts biggest quarterly profit in a decade

SAN FRANCISCO: Intel Corp has posted its largest quarterly net income in a decade as the company benefits from a strengthening computer market and more sophisticated factories.

An encouraging sign for the US economy was that large corporations, which have been slower than consumers to start spending again after the worst of the recession passed, bought more computers that use Intel’s most expensive chips.

That suggests businesses are freeing up their technology budgets, which should have helped other companies as well. Intel’s main rival, AMD Inc, reports on Thursday, while IBM Corp and Microsoft Corp issue results next week.

Intel’s results, reported after the market closed yesterday, topped Wall Street’s forecasts, and the company raised its guidance.

Intel’s net income was US$2.89bil (RM9.9 trillion), or 51 cents (RM1.73) per share, in the quarter ended June 26. That compares with a loss of US$398mil (RM1.4bil), or 7 cents (24sen) per share, a year ago, when Intel was forced to pay a US$1.45bil (RM5bil) fine in Europe over antitrust violations.

Analysts expected a net income of 43 cents (RM1.46) per share in the latest period.

The last time Intel’s quarterly net income topped US$2.5bil (RM8.5bil) was in 2000 during the dotcom heydays, when Internet fever sparked spectacular computer sales.

Revenue was US$10.77bil (RM37bil) in the latest period, above the US$10.25bil (RM35bil) expected by analysts surveyed by Thomson Reuters.

Intel’s third-quarter forecast was stronger than expected. Intel expects a revenue of US$11.2bil to US$12bil (RM38.1bil to RM40.8bil). Analysts are projecting US$10.92bil (RM37bil).

Intel’s profit forecast also got a lift. Intel now expects gross profit margin — a key measure of a company’s ability to control costs — of 64% to 68% of revenue. Its previous forecast was for 62% to 66% .


The results point to robust spending on computers that use Intel’s chips. Intel is the world’s No 1 maker of microprocessors, the “brains” of personal computers and servers.

Consumer spending on discounted PCs has been a major help to Intel over the past year and a half. More recently, US corporate spending on computer servers also came back, but many companies have been stingy about upgrading their work forces’ PCs amid lingering fears about the health of their businesses.

Spending on PCs is critically important to Intel because the company gets the bulk of its profit from the sale of chips that go into PCs.

Intel’s profits have also risen because of technological upgrades to its factories that make its chips more powerful and cheaper to make. That’s a major factor in Intel’s ability to increase its profit margins.

The PC industry has been slowly recovering since a disastrous slump.

It has been more than a year since Intel CEO Paul Otellini declared that PC sales had “bottomed out” and were starting to recover after their worst stretch in six years.

His analysis was accurate, but the semiconductor business is highly cyclical and now many analysts worry that another slowdown could be around the corner. The fears are being stoked by economic wobbliness in Europe and signs of slowing demand in China.

More than half of Intel’s revenue comes from Europe and the Asia-Pacific region.

Still, market research firms IDC and Gartner Inc predict that PC shipments will grow a robust 20% this year. — AP

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Next In Tech News

European countries reach digital services tax deal with U.S
Ford's fleet customers send mixed signals on electric vehicles -exec
Lucid CEO says it will take decade to deploy robotaxis on road
U.S. consumer watchdog orders tech giants turn over information on payment systems
Trump's new social media deal sends SPAC's shares soaring
Facebook's oversight board seeks more transparency on high-profile users
Velodyne Lidar founder plans to nominate directors next year -letter
Meta4 launches NFT fund with Andreessen Horowitz backing
Facebook signs copyright agreement with some French publishers
UK should legislate to prevent scam ads online - FCA, lawmakers

Others Also Read