COMPUTER CHIP giant Intel last night forecast revenue for the second quarter above Wall Street’s estimates, defying fears that the company is struggling to find its footing as personal computer sales growth wanes.
Sales have held up strongly despite fears the growing popularity of smartphones and tablets will begin to eat into the computer chip business. Shares of Intel rose 3.5 per cent in extended trading after closing up 1.22 per cent on Nasdaq.
The company is benefiting as mobile devices, including the Apple iPad, drive demand for online services provided by Intel-powered servers. Even as PC sales were under pressure last quarter, Intel’s 80 per cent share of the microprocessor market gives sales a boost whenever companies upgrade their server and PC fleets.
“The corporate refresh cycle is well under way,” said Bill Kreher, a St Louis-based analyst for Edward Jones. “On the server side, we see continued strength and that will probably continue throughout the year.”
Intel reported a 25 per cent jump in first-quarter revenue to $12.8 billion, beating estimates. First-quarter net profit was $3.2 billion, up 29 per cent over the year-ago period. Earnings per share were 56 cents.
Analysts had expected first-quarter revenue of about $11.59 billion. Concerns Apple’s iPad tablets are squeezing sales of traditional PCs have hung over Intel, along with worries across the electronics industry about supply constraints after Japan’s March 14th earthquake and tsunami.
Computer sales in the first quarter fell for the first time since 2009 as the iPad attracted buyers in droves and Japan focused on recovery, according to research firm Gartner. Last night’s report was the first to include results from Intel’s $7.68 billion acquisition of data security firm McAfee and its $1.4 billion purchase of Infineon’s wireless unit.
The fiscal first quarter had one more week to it than usual.
Intel said revenue in the current quarter would be $12.8 billion, plus or minus $500 million. Analysts had expected revenue of $11.59 billion for the first quarter and $11.87 billion for the second quarter. – (Reuters/Bloomberg)
