Intel Corp. (INTC: Quote) said Tuesday after the markets closed that its second quarter profit fell 4% from last year, as higher operating expenses offset a 3.6% increase in revenue.
The company's quarterly earnings per share came in above analysts' expectations, but its quarterly revenue fell shy of analysts' forecast.
The company gave a downbeat revenue forecast for the third quarter and cut its revenue growth outlook for the full year 2012.
"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."
Intel shares are currently losing 1.38% in after hours trading after closing the day's regular trading session at $25.38, up 25 cents. The shares trade in a 52-week range of $19.16 to $29.27.
Intel is the first major technolgy company to report second quarter earnings, with many technology giants lined up for reporting later this week.
The world's biggest chipmaker reported net income for the second quarter of $2.83 billion or $0.54 per share, compared to $2.95 billion or $0.54 per share for the year-ago quarter.
Excluding items, adjusted net income for the second quarter was $2.97 billion or $0.57 per share, compared to $3.13 billion or $0.57 per share in the prior year quarter.
On average, 44 analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the second quarter.
Gross margin for the second quarter improved to 63.4% from 60.6% a year ago, while adjusted gross margin for the quarter increased to 64.4% from 61.7% last year. The company attributed the improvement to lower start up costs, lower inventory write offs and higher platform volume.
Operating expenses for the quarter surged 19% to $4.7 billion, with R&D expenses up 26% and MG&A expenses up 11.5%.
Santa Clara, California-based Intel said revenue for the second quarter rose 3.6% to $13.50 billion from $13.03 billion in the same quarter last year. Forty-four analysts analysts had a consensus revenue estimate of $13.56 billion for the second quarter.
The company said the second quarter revenue was slightly below expectations due to softness in its NAND memory busniess.
PC client group revenue for the second quarter increased 4% year-over-year to $8.7 billion. This group caters to desktops, notebooks, and wireless connectivity products.
Intel is the world's largest supplier of microprocessors, the brains of personal computers, with roughly 80% of the global market share.
Earlier this month, two industry research firms International Data Corp. (IDC) and Gartner Inc. (IT) said that global PC shipments in the second quarter of 2012 were down 0.1% from last year, as the popularity of latest smartphones and media tablets continued to hit PC demand.
Data center group revenue for the quarter rose 15% from a year earlier to $2.8 billion. This group caters to the server and storage markets.
Other Intel Architecture Group revenue for the quarter fell 20% to $1.1 billion. This group caters to the smartphone, tablet, netbook and mobile communication markets.
Software and services group revenue surged 15% to $586 million in the second quarter.
About 58% of Intel's revenue in the second quarter came from the Asia-Pacific region. Thee company's Asia-Pacific revenue for the quarter rose 5% and Europe revenue grew 6%, while Americas revenue for the quarter declined 1%. Japan revenue for the quarter increased 2%.
Intel used $1.1 billion to buy back stock during the second quarter.
Looking forward, the company said it expects third quarter revenue to be $14.3 billion, plus or minus $500 million. Analysts currently expect the company to post revenue of $14.60 billion for the third quarter.
Gross margin for the third quarter is expected to be 63%, plus or minus a couple percentage points, while adjusted gross margin for the quarter is expected to be 64% plus or minus a couple percentage points.
Intel said it now expects full year 2012 revenue to grow 3% to 5%, down from its prior expectation for high single-digit growth. Analysts currently expects the company's full year 2012 revenue to grow 4.7% from 2011 to $56.54 billion.
The company now expects full year 2012 outlook for gross margin of 64% and adjusted margin of 65%, both plus or minus a couple of points.
Intel is taking all possible steps needed to keep itself on a sustainable growth path. The company said earlier this month that it will take part in a multi-party development program and invest about $4.1 billion in European chip equipment maker ASML Holding NV (ASML) in a bid to speed up deployment of key chip technologies critical to long term growth, amid some sluggishness clouding the industry.
Last month, Intel agreed to buy about 1,700 technology patents related to 3G, LTE and 802.11 technologies from InterDigital Inc. (IDCC) for $375 million in cash. The deal is expected to close in the third quarter of 2012.
| || |
| To receive FREE breaking news email alerts for Intel Corporation and others in your portfolio|
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org