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Notebook PCs Pump Up Intel
Revenue Hits Record During 2nd Quarter

Intel Corp. reported record revenue for the second quarter at $9.2 billion, resulting in $2 billion (33 cents per share) in earnings. By contrast, the chipmaker reported $8 billion of revenue and $1.8 billion (27 cents) in profit in the year-ago quarter.

While second-quarter revenue met Wall Street expectations, the earnings per share came in a penny higher than analysts' projections.

"We continue to see healthy growth worldwide in the PC market," Intel Chief Executive Officer Paul Otellini said in a conference call with Wall Street analysts. He said the Asia Pacific region continues to be a strong market for Intel with China leading the way. Business in Latin America also saw great improvements.

Microprocessors for notebook PCs continued to do well for Intel, which markets a series of laptop-computer chips under the Centrino brand name. Shipment of mobile chips grew 68 percent from the same period a year ago.

Intel Chief Financial Officer Andy Bryant said he expects the momentum to continue in the third quarter, predicting sales between $9.6 billion and $10.2 billion. Intel raised its capital budget for the year to $5.9 billion to expand factory capacity. Earlier, the firm had said it expected to spend somewhere between $5.4 billion and $5.8 billion.

But there were at least a couple of areas that seemed to give Wall Street pause. Intel's gross margins in the second quarter were slightly lower than expected, and some analysts wondered if Advanced Micro Devices is taking some server chip market share away from Intel.

Otellini would not divulge numbers, but he said that while unit shipments of server chips in the second quarter were up from the same period last year, the firm is facing pricing pressure.

Intel shares hit a 52-week high of $28.71 on Tuesday, up 48 cents, or 1.7 percent at the close of regular trading. The stock fell by $1.26 in extended trading after quarterly results were released.

The drop in share price in after-hours trading may have more to do with a backlash from bullish investors who were hoping that Intel would beat Wall Street expectations, said John Lau, an analyst at Jefferies & Co.

They may have been encouraged by Intel's improved business this year, he said. Indeed, Intel recently raised its second-quarter sales forecast to a range of $9.1 billion to $9.3 billion, compared to an earlier forecast of $8.6 billion and $9.2 billion.

"I think there is an overreaction in the market," Lau said. "I think that expectations have been running high for the company and when they didn't exceed the (forecast), there may have been some disappointment."

About SOA News Desk
SOA World Magazine News Desk trawls the world of distributed computing and SOA-related developments for the latest word on technologies, standards, products, and services and brings key information to you in a timely and convenient summary form.

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