Intel Q1 results strong, phone incoming

Intel delivered strong first-quarter results, upped its outlook for the second quarter and said that it will power its first smartphones shortly.
Written by Larry Dignan, Contributor

Intel delivered strong first-quarter results, upped its outlook for the second quarter and said that it will power its first smartphones shortly.

The chip giant reported first-quarter earnings of US$2.7 billion, or 53 cents per share, on revenue of US$12.9 billion. Wall Street was expecting earnings of 50 cents per share on revenue of $12.84 billion.

As for the outlook, Intel projected second-quarter revenue of US$13.6 billion, give or take US$500 million. Wall Street was looking for sales of US$13.45 billion. Intel projected gross margins of 62 per cent to 63 per cent, which was better than expected. For 2012, Intel is projecting gross margins of 64 per cent to 65 per cent. Intel will spend about US$12.5 billion on capital expenditures.

The company said that it is set up for strong second-half growth.

By business unit, Intel's results were mixed. PC client, datacentre and other products all fell compared to a year ago. Software was down, too.

Chief financial officer Stacy Smith said in his commentary on the quarter:

Similar to the fourth quarter, our business was negatively impacted by hard-drive shortages and the resulting additional reduction of inventories across the supply chain. Despite this reduction in inventory levels, it is our belief that the shortage did not impact actual sales of personal computers in the first quarter, with demand trends playing out as expected. We believe that the hard-drive supply situation improved as we progressed through the first quarter, and we are not forecasting any negative impacts to our business going forward.

Going into the first-quarter results, analysts noted numerous wild cards, including the launch effects of Windows 8 and sales of new ultrabooks.

Intel's long-awaited smartphone strategy, however, is finally ready for lift-off, said CEO Paul Otellini.

"We expect to see another important milestone for our business later this week. The launch of the world's first Intel architecture-based smartphone," said Otellini, speaking on the company's earnings conference call.

Details beyond that were sparse, but Otellini touted a Lenovo-Intel smartphone at the Consumer Electronics Show (CES) in January. The company did say that it has made progress on CES announcements with Lenovo and Motorola.

Intel's smartphone strategy is being closely watched, since it represents future growth for the company. The catch is that Intel faces fierce competition from the likes of ARM architecture players Qualcomm and Texas Instruments, among others.

The chip giant in datacentres and PCs enjoys a lopsided duopoly with AMD.

By the numbers for the first quarter:

  • Cash and equivalents was US$4.43 billion, down from US$5.06 billion a year ago on 31 December

  • Inventory was US$4.49 billion, up from US$4.1 billion as of 31 December

  • Asia-Pacific revenue was 57 per cent of sales, with Americas at 20 per cent. Europe checked in at 14 per cent of revenue with Japan at 9 per cent

  • Intel ended 31 March with 100,800 employees.

Via ZDNet US

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