Intel beat analysts’ expectations for its earnings for the second quarter today, reviving hopes that the PC isn’t dead. But the company also cut its revenue guidance somewhat for the third fiscal quarter, citing a challenging macroeconomic environment.
Intel is the world’s largest chip maker and the largest maker of PC microprocessors, making it a bellwether for the computer industry. The Santa Clara, Calif.-based chip giant has been busy launching its Ivy Bridge hybrid microprocessor-graphics chips that are the heart of Ultrabooks, or the thin and fast laptop computers that are the industry’s best attempt to hold off tablet sales.
Revenues for the quarter was $13.5 billion, compared with $13.1 billion a year ago. Net income was $2.8 billion, compared with $3.2 billion a year ago. Earnings per share were 54 cents, matching what they were a year ago. Analysts had expected Intel to report a profit of 52 cents a share.
Intel also said it expects revenues to be $14.3 billion for the third quarter, plus or minus $500 million. The midpoint for the guidance is $200 million lower than what analysts expected. Research and development cost in the third quarter is expected to be $4.6 billion, and gross margin percentage is expected to be 63 percent to 64 percent, plus or minus a couple of points.
“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 chief executive, in a statement. “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.”
Intel said that PC Client Group revenue was $8.7 billion, up 3 percent from the prior quarter. Data Center Group revenue was $2.8 billion, up 14 percent sequentially. Other Intel Architecture Group revenue was $1.1 billion, up 3 percent.
In the first quarter, Intel’s revenues were $12.9 billion and earnings were $2.7 billion, or 53 cents a share. In after-hours trading, Intel’s stock price fell 1 percent a share. It has previously closed at $25.38 a share.
Analysts believe the quarter was affected in part by slowing growth in the PC market, which has been hurt by sales of tablets. During the quarter, Intel shipped its first chips for smartphones in an attempt to assault ARM’s empire in mobile chips.
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Learn more about membership.