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Intel Corp. (NASDAQ: INTC) today reported better-than-expected second quarter results, allaying fears that the economic slowdown would hurt the world's largest chipmaker.Net income rose 25% to $1.6 billion, or 28 cents and sales jumped 9.1% to $9.47 billion, beating analysts' expectations of profit of 26 cents on revenue of $9.33 billion. The company even gave robust guidance of $10 billion to $10.6 billion. Analysts surveyed by Bloomberg expected sales of $10.01 billion. Shares of the Santa Clara, Calif.-based company rose in after-hours trading along with other tech bellwethers such as Microsoft Corporation (NASDAQ: MSFT), Dell Inc. (NASDAQ: DELL) and Google Inc. (NASDAQ: GOOG).
"Intel had another strong quarter with revenue at the high end of expectations and earnings up substantially year over year," said Paul Otellini, Intel president and CEO, in the earnings release. "As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe."
Some skeptics, including me, wondered whether Intel would be hurt by the economic slowdown that's hurting everyone else. After all, are people and companies willing to shell out big bucks for fancy notebook computers during these uncertain times? Well, judging from the company's earnings, the answer appears to be "yes."
Both the mobile and microprocessor units set records. Gross margins rose to 55.4% from 53.8% in the first quarter and 46.9% a year earlier "as growth in demand for lower-priced notebook PCs resulted in a lower-than-expected microprocessor average selling price. In April, the company predicted a gross margin of 56% plus or minus a couple of points," the Wall Street Journal noted.
So it looks like reports of Intel's decline were overblown.
``If the slowdown were that pervasive, then Intel would have already seen it,'' Raymond James analyst Hans Mosesmann told Bloomberg News.
Good point.
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