Intel increases quarterly revenue

Intel's second-quarter revenue rose by 8% compared with last year's second quarter, in what is usually a seasonally slow quarter...

Intel's second-quarter revenue rose by 8% compared with last year's second quarter, in what is usually a seasonally slow quarter for the chip maker.

"[The second quarter] was slightly better than expected, and substantially better than a year ago," said Intel president and chief operating officer Paul Otellini.

The company reported revenue of $6.8bn ($4.3bn),  compared with revenue of $6.3bn in last year's second quarter.

Net income was $896m (£563m), up 101% from last year's second-quarter net income of $446m. Last year's second-quarter net income figures included $218m in charges related to divestitures and write-offs.

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 $5.8bn (£3.6bn).

Intel had expected flat revenue from its microprocessor division, but  was surprised by the strength of emerging markets, especially Asia-Pacific, where the company set a revenue record.

Intel's processor division has now reported results at the high end of seasonal patterns for three consecutive quarters, said Andy Bryant, chief financial officer at Intel.

Intel competitor Advanced Micro Devices (AMD) is expected to blame the outbreak of Sars for a revenue shortfall when it reports second-quarter results this week.

Other hardware suppliers expected lower revenue in Asia because of slower sales caused by the virus, but Sars had "a very modest impact" on Intel.

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.

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 Sars was felt by the flash memory business, but demand remains strong for high-end mobile phones with flash memory.

Intel said it expected its third-quarter revenue to be between $6.9bn (£4.3bn) and $7.5bn. The company expects to incur a tax benefit in the third quarter from a divestiture that is close to completion.

Tom Krazit writes for IDG News Service

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