Intel Rides Tech Recovery With Strong Results
April 13 (Bloomberg) -- Cody Acree, research director at Williams Financial Group, talks with Bloomberg's Carol Massar about Intel Corp.'s first-quarter earnings and forecast. The world's biggest chipmaker forecast second-quarter sales that topped analysts' predictions. The forecast follows record first-quarter sales, fueled by consumers ordering laptops. (This is an excerpt of the full interview. Source: Bloomberg)
April 13 (Bloomberg) -- Doug Freedman, an analyst at Broadpoint AmTech Inc., talks with Bloomberg's Carol Massar about Intel Corp.'s first-quarter profit and the outlook for the company. The world’s biggest chipmaker forecast second-quarter sales that topped analysts’ predictions, citing growing worldwide demand for computers. (Source: Bloomberg)
April 14 (Bloomberg) -- Stacy Smith, chief financial officer at Intel Corp., talks with Bloomberg's Susan Li about demand for personal computers. The world’s biggest chipmaker forecast second-quarter sales that topped analysts’ predictions, citing growing worldwide demand. Speaking from Santa Clara, California, Smith also discusses Apple's iPad, partnerships and China's currency policy. (Source: Bloomberg)
Intel Corp., the world’s biggest chipmaker, forecast second-quarter sales that topped analysts’ predictions, citing growing worldwide demand for computers. The shares rose in late trading.
Sales will be $10.2 billion, plus or minus $400 million, the Santa Clara, California-based company said today in its quarterly earnings statement. Analysts had estimated $9.72 billion on average, according to a Bloomberg survey.
The construction of data centers and the continuing shift to mobile computers will drive growth for the rest of the year, Intel said. That prompted the company to increase its full-year gross margin forecast to about 64 percent from roughly 61 percent. The prediction follows record first-quarter sales, fueled by consumers ordering laptops.
“They’re very strong numbers,” said Cody Acree, an analyst at Williams Financial Group in Dallas. He has a “hold” rating on Intel shares. “It’s well above what anyone was expecting.”
Intel rose 82 cents, or 3.6 percent, to $23.59 in extended trading following the announcement. The shares, which have gained 12 percent this year, closed at $22.77 on the Nasdaq Stock Market. Other technology stocks also climbed in late trading, with Microsoft Corp. rising 43 cents to $30.88 and International Business Machines Corp. advancing 69 cents to $129.72.
Corporate Demand
First-quarter net income climbed almost fourfold to $2.44 billion, or 43 cents a share, from $629 million, or 11 cents, a year earlier. Analysts projected 38 cents a share. Revenue increased 44 percent to $10.3 billion, compared with the average estimate of $9.85 billion.
There are signs that corporate demand is increasing, Chief Executive Officer Paul Otellini said on a conference call. Sales of high-end personal computers helped boost Intel’s profitability, he said.
Customers aren’t building up excess stockpiles of chips, a sign the industry isn’t at risk for a supply glut, Stacy Smith, Intel’s chief financial officer, said in an interview.
“When we look through the supply chain, what we see are healthy and appropriate inventory levels relative to how we see demand,” he said. “It was an incredible first quarter for us.”
Cloud Computing
Cloud computing, which lets businesses get their software and information over the Internet from external data centers, also is fueling demand for server chips, Smith said.
In January, the company forecast first-quarter sales of $9.7 billion, plus or minus $400 million. It predicted gross margin, or the percentage of sales remaining after deducting the cost of production, of about 61 percent. It came in at 63 percent.
The gross margin this quarter will be about 64 percent, Intel said today.
The company leads off two weeks of earnings reports by the largest U.S. technology companies, including IBM, Google Inc. and Microsoft. Intel supplies more than 80 percent of the world’s PC processors, making its sales a barometer of computer industry demand.
Notebook shipments jumped 37 percent in the first quarter from a year earlier and account for 61 percent of the market, according to El Segundo, California-based ISuppli Corp.
Intel is profiting from the relative weakness of its main rival, Advanced Micro Devices Inc., according to Tristan Gerra, an analyst at Robert W. Baird & Co. in Milwaukee. Intel also has a new chip lineup, which it released in the first quarter.
“Intel is in front of the best product cycle in years,” said Gerra, who has an “outperform” rating on the stock and doesn’t own it. “On top of that, we believe that Intel is gaining market share.”
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
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