Intel Reports Increased Net Income, Foresees Slow Growth in Third Quarter
July 18, 2012 3:41 AM
net income increased 3 percent to $2.8 billion (54 cents a share) and revenue rose 5 percent to $13.5 billion from $13.03 billion this time last year
Leading chip maker
Intel reported increased revenue and net income in its second-quarter earnings today, but predicts slowed growth in the forthcoming third quarter.
According to Intel's earnings report, the company's net income increased 3 percent to $2.8 billion (54 cents a share) and revenue rose 5 percent to $13.5 billion from $13.03 billion this time last year. This was great news for Wall Street, which previously estimated a net income of 52 cents a share and revenue around the $13.54 to $13.56 billion mark.
The gross margins, on the other hand, fell slightly from 64 percent to 63.4 percent. The hit likely comes from increased revenues.
Looking ahead, Intel predicts a revenue of $14.3 billion (plus or minus $500 million) for Q3 2012. Analysts expected somewhere in the realm of $14.60 billion.
"The second quarter was highlighted by solid execution with continued strength in the data center and multiple
product introductions in Ultrabooks
and smartphones," said Paul Otellini, Intel president and CEO. "As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment. With a rich mix of Ultrabook and Intel-based tablet and phone introductions in the second half, combined with the long-term investments we're making in our product and manufacturing areas, we are well positioned for this year and beyond."
The slow growth expected in Q3 2012 mainly comes from Intel's deep roots in PCs, but its large absence from mobile computing. Intel supplies 80 percent of the world's processors for PCs and depends on markets like computer servers and personal computers, which are seeing decreased demand with the recent explosion of mobile devices like smartphones and tablets.
The release of Ultrabooks, while still not as popular as tablets/smartphones, were supposed to add some pizzazz to the PC market for makers like ASUS and Dell. However, some worry that the high-end features of Ultrabooks make them too expensive for most consumers (and will continue getting more and more costly with options like touchscreen features).
Intel cut its 2012 revenue growth prediction from high single-digits to 3-5 percent.
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