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Intel's Earnings Improve; World's Top Chip Maker Posts Revenue Records in Emerging Markets

Posted on: Wednesday, 20 July 2005, 18:00 CDT

SAN JOSE, Calif. Intel Corp.'s second-quarter earnings grew 16 percent and sales jumped to a record $9.23 billion Tuesday as the world's largest chip maker continued to profit from the rising popularity of notebook computers and growth in emerging markets.

The Santa Clara, Calif., company said total microprocessor shipments for the quarter set records, while chips designed specifically for mobile computers jumped 68 percent over last year. Flash memory chips used in cell phones and wireless chips also saw record shipments.

Intel also set revenue records in emerging markets, including China, and it posted double year-over-year growth in Latin America.

Intel also said it expects the growth to continue into the current quarter, with overall sales rising to between $9.6 billion and $10.2 billion, said Andy Bryant, Intel's chief financial officer.

"This is a good second quarter a period when business is typically slow," he said. "The momentum of the first half appears to be continuing as we enter the third quarter. Demand is strong. The factories are full. We're ahead of our cost targets, and business is generating high levels of cash."

For the three months ended July 2, Intel earned $2.04 billion, or 33 cents per share, compared with $1.76 billion, or 27 cents per share, in the same period last year. Revenue rose 15 percent from the $8.05 billion reported in the second quarter of 2004.

Analysts were expecting the chip maker to earn 32 cents per share on sales of $9.22 billion, according to a survey by Thomson Financial.

Still, Intel's gross margin percentage a measurement of the difference between sales and the cost of the products sold came in slightly below forecasts because of higher startup costs and lower margins in products other than processors.

The results were announced after the close of markets. Earlier, shares of Intel closed at $28.71, up 48 cents. In the extended session, they lost $1.24, or 4.3 percent.

In June, Intel raised its second-quarter sales forecast to between $9.1 billion and $9.3 billion from its previous guidance of $8.6 billion and $9.2 billion. At the time, it attributed the improvement to strong sales of microprocessors designed specifically for notebooks.

"Our investments in new products, advanced silicon capacity and emerging markets are paying off with growth that is outpacing the industry," said Paul Otellini, Intel's chief executive.

Source: Columbian

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