Intel's earnings, notebook sales raise hopes for tech sector
SAN FRANCISCO -- "Notebook and netbook sales were strong," said Intel CFO Stacy Smith, pointing out that the improvement from first quarter to second quarter was the best for Intel since 1988.
He expects "seasonably strong" second-half sales this year.
Intel's news comes on the heels of Dell's announcement that demand for its computing products has stabilized and that it expects a slight increase in revenue in its current quarter.
IBM is expected to report encouraging results on Thursday.
"Intel's results carry good implications for IBM, Hewlett-Packard and Apple," says Tim Luke, managing director at Barclays Capital.
To be sure, the numbers did not stack up well compared with the same quarter a year ago.
Revenue for the No. 1 semiconductor maker was $8billion, down from $9.5 billion a year ago. Net income, meanwhile, was $1 billion, or 18 cents a share, compared with $1.6 billion, or 28 cents, last year. Including a $1.45 billion fine from the European Union, Intel lost $398 million, or 7 cents per share.
Intel's quarterly results exceeded the predictions of financial analysts.
The company's shares surged 7.5%, to $18.09 in after-hours trading on the news, released after markets closed.
Still, PC shipments are projected to drop this year for the first time since the dot-com bust in 2001, says market researcher iSuppli. Global shipments should decline 4% from 2008, to 287.3 million units. There is some good news: Low-cost notebook PC shipments will rise 12%, to 156 million units, this year, says iSuppli. And it expects overall PC growth in 2010.
"The first quarter was negatively impacted by a surplus of unsold (PC) inventory caused by a weak economy," says Dean McCarron, chips analyst at Mercury Research. "That inventory is returning to actual market conditions."
