SAN JOSE, Calif. -- Intel Corp.'s shares fell Wednesday after the chip maker reported first-quarter results that missed Wall Street's expectations despite stronger demand from businesses for computers and other high-tech gear.
Intel also said after the market closed Tuesday that it expects the current quarter's revenues to be between $7.6 billion and $8.2 billion. Though the midpoint is below analysts' consensus expectation of $8.09 billion, it's above historical declines in the second quarter, one of the weakest periods of the year.
The company's shares fell 30 cents to close at $27.37 on the Nasdaq Stock Market.
For the three months ended March 27, Intel reported a profit of $1.73 billion, or 26 cents per share, compared with a profit of $915 million, or 14 cents per share, in the same period a year ago.
First-quarter sales rose to $8.09 billion, compared with $6.75 billion in the first quarter of 2003.
"Intel's first quarter results showed healthy growth in both revenue and earnings compared to a year ago, led by improvement in worldwide (information technology) spending," said Craig Barrett, Intel's chief executive.
The results include a 1.7 cent-per-share charge from Intel's $225 million payment to Intergraph Corp. to settle a long-running patent dispute. The agreement was announced March 30.
Analysts expected Intel to earn a profit of 27 cents per share on sales of $8.16 billion, according to a survey by Thomson First Call. In January, the Santa Clara, Calif.-based company predicted first-quarter sales of between $7.9 billion and $8.5 billion.
In an interview, chief financial officer Andy Bryant said revenues grew in every part of the world.
"Everybody contributed to that 20 percent (sales) growth. It's not just emerging markets anymore. It's Europe and the U.S. well," he said.
In January, Intel said demand for microprocessors was at the lower end of seasonal expectations. Analysts believed that was due to a temporary and unexpected buildup of notebook computer inventory.
"We believe that's resolved itself," Bryant said. "We don't see any of the excess mobile inventory at this point."
John Lau, an analyst at Banc of America Securities LLC, said it appears demand has picked up for notebooks and burned off any excess parts.
"As a result, we see the next generation notebook processor remains on schedule for volume delivery in May," he said. "That wouldn't occur if there was still excess inventory of older parts in the channel."
The company said shipments of microprocessors declined over the fourth quarter, as did chipsets and motherboards. Processors, however, had a slightly higher average selling price.
Intel said shipments of flash memory, used in cell phones, improved over the fourth quarter. The company's communications group posted sales of $1.07 billion in the first quarter, compared with $1.04 billion in the fourth, though the operating loss increased to $219 million.
"If you go back and look at 10 years of history, the first quarter (sales) is almost always down. That was a pleasant surprise," Bryant said.
Intel is currently ramping up production of its latest Pentium 4 chip, which was released in early February. It also is updating its Xeon server processors to support 64-bit memory extensions to better compete with Advanced Micro Devices Inc.'s 64-bit Opteron processors.
Dismissing reports of trouble with the Pentium 4's new manufacturing processes, Bryant said yields were higher than anticipated.
Lau said Intel's guidance downplayed concerns about demand.
"There has been a lot of concern in the marketplace on the demand for PC notebooks and desktops," he said. "We're very comforted by the fact Intel has given us guidance for Q2 that is a seasonally normal quarter."
On the Net:
Intel Corp.: http://www.intel.com
© 2017. All Rights Reserved. | Contact Us