INTEL REPORTED its first loss in 22 years for the second quarter, but still saw its shares jump the most in four months.
The results and outlook for the world’s largest computer chip manufacturer beat Wall Street forecasts on better-than-expected consumer demand for PCs, especially in Asia, setting an auspicious tone for the technology sector.
Intel posted a second-quarter net loss of $398 million (€282 million), or 7c a share – its first quarterly loss since 1986 – after taking charges linked to a $1.45 billion fine imposed by European regulators, which ruled that Intel abused its market position to squeeze out AMD. Intel intends to appeal.
However, stripping out exceptional charges, including that fine, Intel said it earned 18 US cents a share in the second quarter, more than twice analysts’ expectations.
Intel, which employs about 5,000 people in Ireland, also projected third-quarter revenue at $8.1 billion to $8.9 billion, compared with analysts’ average forecasts of $7.8 billion.
Chief financial officer Stacy Smith said fourth-quarter gross margins could scale the high end of a “normal” range – which Intel defines as 50 to 60 per cent – due partly to declining production costs for new generations of chips, and other factors.
Intel’s strong showing came despite what it described as weak demand from the corporations that traditionally are big buyers of computer equipment, and comments by Intel executives that Microsoft’s forthcoming Windows 7 operating system is unlikely to revive corporate spending this year.
“You have an $8 billion quarter with very little enterprise spending taking place,” said Broadpoint Amtech analyst Doug Freedman. “The consumer is healthier than we expected.”
Revenue in the three months ended June 27th was $8 billion, down 15 per cent year-over-year, but well above the average $7.27 billion expected by analysts.
Mr Smith told Reuters that computer markets were strengthening and there were “pockets of relative strength” in consumer PC markets, as well as in the Asia Pacific region and in China. – (Reuters)
