Intel results beat estimates but posts loss on EU fine

Intel INTC offered support Tuesday for its assertion that the computer business is rebounding, even as other parts of the industry throw off mixed signals. Intel's results and outlook were much better than analysts' subdued estimates, sending its shares up 7% after hours.

In the quarter that ended June 27, the chipmaker posted sales and profit that breezed past Wall Street's forecasts — though investors had to overlook a $1.45 billion antitrust fine from the European Union. The fine — which Intel had to pay while it is appealing the case — gave the world's biggest semiconductor company a net loss.

Intel earned $1 billion, or 18 cents a share, in the second quarter, excluding the EU fine. On that basis, analysts expected a profit of 8 cents a share, according to Thomson Reuters.

Including the fine, Intel lost $398 million, or 7 cents a share. In the same quarter last year, its profit was $1.6 billion, or 28 cents per share.

Sales fell 15% to $8.02 billion in the most recent quarter. Analysts had predicted $7.28 billion.

The results show that demand for chips is improving. PC builders are ordering more processors, mainly because they've burned through massive amounts of inventory to save money and now have to restock. That doesn't mean the machines they're building are necessarily flying off the shelves.

The No. 2 PC maker, Dell, warned Monday and Tuesday that its sales to businesses remain weak. Dell executives said the U.S. PC market might have hit its bottom, though. Meanwhile, Hewlett-Packard, the world's biggest PC seller, offered a lower-than-expected sales forecast in May.

Intel's chief financial officer, Stacy Smith, said Intel's results reflected "a combination of strengthening end demand and a partial replenishment of the worldwide supply chain."

Intel's third-quarter sales outlook of $8.5 billion, plus or minus $400 million, was significantly better than the average estimate of analysts polled by Thomson Reuters. Analysts projected $7.8 billion in sales.

That helped drive Intel shares up $1.16 to $17.99 in extended trading. Before the earnings report, the stock closed at $16.83, up 2.1% on the day.

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