Intel beats Q2 forecasts, improves outlook

Intel on Tuesday delivered an impressive second quarter relative to Wall Street estimates, and did not disappoint on its outlook.

The company, which predicted a bottom in its first quarter results, delivered strong results across the board. Intel reported net income of $1bn (£600m), or 18 cents a share. That sum excludes a European Commission fine of $1.44bn. If you include the Commission fine, Intel lost $398m, or seven cents a share. Revenue for the second quarter was $8bn, down $1.4bn from a year ago.

Wall Street was expecting earnings of eight cents a share on revenue of $7.28bn for the second quarter.

But the real story for Intel this quarter was its gross margin line, the one that garnered the most Wall Street focus. Intel said its gross margin for the second quarter were 50.8 percent. According to Thomson Reuters, analysts were expecting gross margins of 46.37 percent in the June quarter and 49.76 percent for the September quarter.

Meanwhile, Intel delivered a solid outlook — relative to expectations. It projected revenue of $8.5bn, give or take $400m with gross margin of 53 percent with two percent leeway. For the third quarter, Wall Street is expecting earnings of 16 cents a share on revenue of $7.81bn.

Shares surged about seven percent in after-hours trading.

For the year, Intel refrained from specific guidance, but did not indicate that spending would be $10.6bn to $10.8bn, up from its prior outlook. Capital spending will be $4.7bn give or take $200m, down from $5.2bn in 2008.

In a statement, Intel chief executive Paul Otellini said: "Intel's second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half."