THE GOING MAY BE TOUGH, but Intel apparently is tougher, with the firm's second quarter financial report showing better than expected results today.
Intel's Q209 revenue was a cool $8 billion, which is up 12 per cent sequentially but a long way off its former $9.5 billion glory in the same period last year. Still, the firm obliterated analysts predictions for net income of just $700 million, leading some, like Insight 64's Nathan Brookwood, to declare the firm had done "spectacularly well."
Master of understatement, Intel CEO Paul Otellini, said "Our second-quarter results were clearly better than we expected," adding "Intel's second-quarter results reflect improving conditions in the PC market." That's good news for an industry which has seen PC makers lose between a fifth and a quarter of sales in the last half year. It also bears out what Otellini told analysts back in April, when he declared the PC slump had reached its rock bottom and could now start the long hard process of recovery.
Intel reported gross margin for the quarter of 51 per cent, up an optimistic 5.5 points sequentially, but net income was soberingly down to $1 billion from the $1.6 billion profit Chipzilla reported this time last year.
The firm also had to factor in the huge fine levied against it earlier this year by the EU Competition Commission, which recently found the chip giant guilty of antitrust abuse and bullying its smaller rival AMD in the European market. The $1.45 billion fine meant Intel had to post a loss of $398 million, or 7 cents a share. Intel also announced it earned 18 cents a share this quarter which, although down from 28 cents last year, did beat analyst estimates by 10 cents.
Despite warning that it was too soon to toll the victory bell just yet, with enterprises still acting very cautiously when it comes to splashing out on new PCs and computing equipment in the still severly depressed economy, Intel did feel confident enough to offer a forecast for the current quarter, something it refused to do last time around. Chipzilla said it is expecting revenues to fall somewhere in the region of $8.1 billion to $8.9 billion, "a clear expectation for a seasonally stronger second half," well ahead of analyst predictions of $7.8 billion.
Stacy Smith, Intel's CFO, put the better than expected results down to "strong execution from the company," and reckoned the solid demand seen by the firm through the end of the second quarter inspired confidence. "We saw some really healthy pockets of end-demand," he added.
Those healthy deep pockets are sure to be padded even further in the coming months by Intel's line of ultra thin, ultra light processors for anorexic notebooks. "Intel are in a strong position at the moment," Brookwood told the INQ, adding that the firm could charge a premium for its CULVs over comparable Core 2 parts for mobile PCs. "The ultra thins are compelling products," Brookwood told us, saying the slimline machines, like Acer's Timeline, looked "at least as cool as a Mac Book, but at 50 per cent of the cost to consumers. "Those are really taking off," he told us.
And whereas enterprise may still be skeptical about spending, consumers seem to be taking a more 'devil may care' attitude again, which leaves Intel, and many others in the battered PC industry, feeling a bit more chipper. µ