Intel and Dell perform better than expected

INTEL AND Dell, the technology giants that have reduced staff numbers here in the last year, pleased markets yesterday with better…

INTEL AND Dell, the technology giants that have reduced staff numbers here in the last year, pleased markets yesterday with better than expected financial news.

Chipmaker Intel unexpectedly raised its forecast for third-quarter revenues citing strong demand for its microprocessors and chipsets.

It said revenues for the current quarter are now likely to be in the range of $8.8-$9.2 billion (€6.2-€6.4 billion), rather than the previous guidance of $8-1-$8.9 billion.

It said gross margins would be in the upper half of its previous range.

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Dell reported a stronger-than-expected second quarter profit on Thursday night, showing it was better able to cut costs and protect prices on its products than analysts, or its own executives, had predicted.

For the quarter which ended on July 31st, Dell had a net profit of $472 million, down from $616 million for the same period last year.

Revenue fell 22 per cent to $12.8 billion, but this was ahead of Wall Street’s estimate of $12.6 billion.

The news lifted shares in both companies.

At lunch time in New York Dell was trading at $16.05, a gain of 2.5 per cent, while Intel was up over 4 per cent at $20.28.

“I think this is really great news for the overall PC industry,” said Carlos Guillen, analyst at Wall Street Strategies. “Dell showed signs that the consumer was picking up its spending. Overall, corporate is down and it is a large portion of their revenue. But the consumer continued to increase purchases, which was definitely a good sign.”

Last month Intel announced it would seek 294 compulsory redundancies as falling demand for older products led it to close one of its four facilities in Leixlip.

At the beginning of the year Dell said it was relocating its European manufacturing from Limerick to Lodz in Poland with the loss of 1,900 jobs.

Dell reported gross margins of 18.7 per cent, thanks to cost cuts, what it called “disciplined” pricing, an increase in enterprise sales from the first quarter and a $69 million buyout of a revenue-sharing agreement by a vendor.

Laptop shipments were roughly flat, while revenue fell 21 per cent.

Desktop units fell 23 per cent as revenue declined 33 per cent. While the bulk of Dell’s business comes from PC sales, the company said it is gaining share in servers and storage. – (Additional reporting: Reuters)