Intel increases Q2 revenue, doubles net income

Intel’s second-quarter revenue rose 8% compared to last year’s second quarter, and 1% over the first quarter, in what is usually a seasonally slow quarter for the chip maker, the company said Tuesday.

Intel’s second-quarter revenue rose 8% compared to last year’s second quarter, and 1% over the first quarter, in what is usually a seasonally slow quarter for the chip maker, the company said Tuesday.

“(The second quarter) was slightly better than expected, and substantially better than a year ago,” said Intel president and COO Paul Otellini during a conference call following the announcement.

The company reported revenue of $6.8 billion, as compared to revenue of $6.3 billion in last year’s second quarter. Net income was $896 million, up 101% from last year’s second-quarter net income of $446 million. Last year’s second-quarter net income figures included $218 million in charges related to divestitures and write-offs, Intel said in a release.

Second-quarter earnings per share were $0.14, slightly edging out estimates of $0.13 by analysts polled by Thomson First Call.

Revenue from the Intel Architecture group, which manufactures and sells the company’s desktop, mobile and server processors, was up slightly over the first quarter of this year, at $5.8 billion. Intel had expected flat revenue from its microprocessor division, but was pleasantly surprised by the strength of emerging markets, especially Asia-Pacific, where the company set a revenue record, Otellini said.

Intel’s processor division has now reported results at the high end of seasonal patterns for three consecutive quarters, said Andy Bryant, CFO at Intel, during the conference call.

Intel competitor AMD is expected to blame the outbreak of the severe acute respiratory syndrome (SARS) illness for a revenue shortfall when it reports second-quarter results this week. Other hardware vendors expect lower revenue in Asia due to slower sales caused by the virus, but SARS had “a very modest impact” on Intel, Otellini said.

The second quarter marked the first full quarter that Intel has sold its Pentium M processor and Centrino mobile package. The company surpassed its goal of shipping one million Pentium M processors in the quarter, and expects to ship two million in the third quarter, Otellini said. Mobile processor shipments grew twice as fast as desktop processor shipments in the second quarter, he said.

Sales of server processors were also strong, led by sales of the Xeon DP processor for one-way and two-way servers, Otellini said.

Flash memory sales were lower for the second consecutive quarter. Intel executives said earlier this year that a decision to raise flash memory prices in the first quarter hurt that business. Any impact of the SARS virus was felt by the flash memory business, but demand remains strong for high-end cell phones with flash memory, Otellini said.

Intel said it expects third-quarter revenue to be between $6.9 billion and $7.5 billion. The company expects to incur a tax benefit in the third quarter from a divestiture that is close to completion, it said in the release.

Investors and observers had been hoping for evidence of a broad recovery in hardware spending, but there is no strong indication that corporate buying patterns have returned to anything more than usual seasonal patterns, Bryant said.

However, Intel is planning to reinstate a program in which the company purchases a PC for home use by its employees. The company suspended that program in 2001 to reduce nonessential costs, Bryant said.