Mobile processors polish Intel financials

Mobile processors polish Intel financials

Intel pointed to strong sales of mobile processors after hitting the high end of its own first quarter financial expectations.

Revenue for the period ending April 2 was $US9.4 billion, up 17 per cent from last year's first quarter revenue of $US8.1 billion and ahead of the target that Intel set for itself during its mid-quarter update.

In March, the company predicted it would take in between $US9.2 billion and $US9.4 billion during the quarter, and analysts polled by Thomson First Call settled on the midpoint of that range when assembling their estimates.

Net income was $US2.2 billion, up 25 per cent from last year's first quarter net income of $US1.7 billion.

While growth in overall processor shipments was flat during the quarter, as compared to the fourth quarter, mobile processor shipments set a record, Intel said. The strong demand for notebook processors was felt especially in Europe and Asia-Pacific, notably China and India, according to Intel president and COO, Paul Otellini.

However, the supply of notebook components remained tight throughout the quarter, Intel's CFO, Andy Bryant, said. Intel had reduced production in the middle of last year in order to burn off excess inventory accumulated during the first half of 2004, but demand was stronger than expected in the fourth quarter and Intel was forced to catch up, leading to supply problems earlier in the first quarter.

The situation improved toward the end of the quarter, but not as much as Intel would have liked, Bryant said.

For the most part, Intel's outlook on the current state of the IT industry was far rosier than the one advanced by other tech heavyweights Sun Microsystems and IBM.

Sun continues to struggle as it reinvents the company with servers based on Intel rival AMD's chips, and problems within IBM's services business led to an earnings miss at that company.

From Intel's point of view, demand for its products was healthy and real, Bryant said.

Last year, it noted solid growth in demand but the company had been concerned about growing inventories at its PC and server customers.

That concern had now abated as Intel's customers were building chips right into PCs and servers that are being shipped right away, he said.

Some analysts were concerned about the slowing growth of the PC market over the remainder of 2005, but Intel was currently expecting a normal uptick in demand during the second half of the year, Bryant said.

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