Intel Q1 profits up 89pc

14 Apr 2004

Microprocessor giant Intel, which employs around 4,000 people in Ireland, has reported a staggering 89pc increase in first quarter profits, which it attributes to a recovery in computer spending worldwide. Intel also said it expects the current quarter’s (Q2) revenues to be between US$7.6bn and US$8.2bn.

For the three months ended 27 March, Intel reported a profit of US$1.73bn, or 26 cents per share, compared with a profit of US$915m, or 14 cents per share, in the same period a year ago.

First-quarter sales rose to US$8.09bn, compared with US$6.75bn in the first quarter of 2003.

The results include a 1.7 cent-per-share charge from Intel’s US$225m payment to Intergraph to settle a long-running patent dispute.

“Intel’s first quarter results showed healthy growth in both revenue and earnings compared to a year ago, led by improvement in worldwide IT spending,” said Craig Barrett, Intel’s chief executive officer.

While Intel’s first-quarter profit matched analyst expectations, its mid-point revenue forecast for the second quarter fell below Wall Street average estimates. Intel also said profit margins in the quarter will be hurt by both lower revenue and increased spending on new chip-making technology.

The results nevertheless come as a pleasant surprise to Intel, during what is historically one of the weaker quarters in the semiconductor calendar. The company said shipments of microprocessors declined over the fourth quarter, as did chipsets and motherboards. Processors, however, had a slightly higher average selling price.

Intel said shipments of flash memory, used in cell phones, improved over the fourth quarter. The company’s communications group posted sales of US$1.07bn in the first quarter, compared with US$1.04bn in the fourth, though the operating loss increased to US$219m.

Intel is currently ramping up production of its latest Pentium 4 chip, which was released in early February. It also is updating its Xeon server processors to support 64-bit memory extensions to better compete with Advanced Micro Devices Inc.’s 64-bit Opteron processors.

By John Kennedy