Intel results beat forecasts; shares jump
Intel Corp. shed a few rays of hope Tuesday when it posted second-quarter results that beat Wall Street’s expectations and triggered a rally in the semiconductor giant’s stock price.
The Santa Clara, Calif., chip company posted $8 billion in second-quarter revenue, up 12% from first-quarter sales of $7.1 billion. Its revenue was powered by sales of its Atom processor, used in fast-selling netbook personal computers, which are lightweight laptops that sell for as little as $200.
Intel Chief Executive Paul Otellini said in a statement that the company’s results “reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half.”
Analysts had expected sales of about $7.3 billion.
A rush of orders from computer makers that use Intel’s chips suggests that manufacturers are expecting a surge of back-to-school shoppers later this summer and better holiday sales than in 2008, when consumers reined in nearly all discretionary spending, Otellini said in a conference call with analysts. He singled out China as a fast-growing market for Intel’s products.
“The U.S. and Chinese consumers have come to Intel’s rescue,” said David Wu, an analyst with Global Crown Capital. “The tech economy is showing signs of muted recovery.”
Intel, nevertheless, posted a quarterly loss of $398 million, or 7 cents a share, primarily because it paid a record $1.45-billion fine imposed by the European Commission, which said the firm restricted competition in the semiconductor market.
It had a $1.6-billion profit in the second quarter last year. Its $8 billion in revenue in the quarter ended June 27 was down 16% from $9.5 billion a year earlier.
Even so, Intel’s stock, which rose 34 cents to close at $16.83, shot up $1.20, or more than 7%, to $18.03 in extended trading after the earnings release.
Some of that bump came from investors who may have been relieved that Intel, considered a bellwether company for the technology sector, did not fare worse.
“People were talking about a 15% to 18% decline in PC sales back in January,” Otellini said. “Now they’re talking [about declines of] 5% to 10%.”
Intel’s results kick off the earnings season for technology companies, with Google Inc. reporting Thursday, followed by Apple Inc., Yahoo Inc., EBay Inc., Microsoft Corp. and Broadcom Corp. next week.
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