Intel's Q2 beats expectations

16-07-2008

by Deirdre McArdle

Despite the current tough economic environment, Intel has posted a 25 percent rise in second quarter profits as demand for its products holds steady.

Intel reported profits of USD1.6 billion for the second fiscal quarter, while revenue amounted to USD9.5 billion for the period, up 9 percent on the same period last year. Back in April Intel had forecast revenue for the second quarter would be between USD9 billion and USD9.5 billion.

Earnings per share grew 27 percent year-on-year to USD0.28; analysts had been expecting USD0.26 per share. Operating income for the quarter soared 67 percent to USD2.3 billion, up from the USD1.4 billion reported in the same period last year.

"Intel had another strong quarter with revenue at the high end of expectations and earnings up substantially year over year," said Paul Otellini, Intel president and CEO. "As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe."

Revenue for the Asia Pacific region jumped 7.8 percent to USD4.8 billion, accounting for 51 percent of total revenue for the quarter. Revenue in the Americas and Europe also rose, up 8.9 percent and 17 percent, respectively.

Intel's mobility unit performed well during the quarter with microprocessor revenue amounting to USD2.7 billion and chipset revenue jumping to USD1.1 billion, up from USD955 million in the year-ago quarter.

For the third quarter Intel expects revenue to be in the region of USD10 billion and USD10.6 billion. The firm expects to spend around USD2.9 billion on R&D (including marketing and admin) during the quarter, which is broadly in line with second quarter spending.

Despite the positive results, Intel could be facing a difficult time in Europe. According to the Wall Street Journal, European regulators are preparing to file new antitrust charges against the chip giant expanding a probe into the firm's marketing and sales practices. The new charges could be brought as soon as Thursday and would allege that Intel gave major European retailers inducements not to sell computers that use chips from its rival, AMD. The paper quoted unnamed sources close to the matter.