Intel's earnings leap on business demand for PCs - East Valley Tribune: Business

Intel's earnings leap on business demand for PCs

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Posted: Tuesday, April 19, 2011 8:56 pm | Updated: 5:49 pm, Wed Apr 20, 2011.

SAN FRANCISCO - Intel Corp. exceeded Wall Street's expectations with first-quarter earnings that jumped 29 percent, as businesses extended their yearlong buying streak and bought lots of new computers.

At 43 years old, Intel is now among the old guard of the computing industry. But its latest quarterly numbers show that the company still wields tremendous firepower even as newcomers challenge its dominance with new types of mobile devices including smartphones and tablet computers.

Intel's guidance was stronger than expected, and the company's confidence sent shares up more than 6 percent in extended trading Tuesday, after the results were reported.

Strong corporate demand for PCs helped Intel overcome a serious product blunder and fallout from the deadly earthquake and tsunami in Japan. The rise of Apple Inc.'s iPad poses a long-term threat to the PC industry because the device is wooing away laptop buyers, but so far the trend appears to have had little impact on Intel's results.

In an interview with The Associated Press, Intel CEO Paul Otellini said he continues to believe that tablets and other mobile devices expand the overall market for computers, even as some analysts are warning that those devices would cut into PC sales.

Intel's net income was $3.16 billion, or 56 cents per share, higher than the 46 cents per share that analysts polled by FactSet expected. A year ago, Intel earned $2.44 billion, or 43 cents per share.

Revenue was $12.8 billion, a 25 percent increase from $10.3 billion a year ago and higher than the $11.6 billion that analysts expected.

The revenue forecast was higher than expected. Intel predicted second quarter revenue of $12.3 billion to $13.3 billion. Analysts expected nearly $11.9 billion, according to FactSet.

Intel had a rare blunder in the first quarter that threatened to derail its results.

In January, the company disclosed a serious design problem in a new "chipset" - a chip that connects a computer's central processor to other parts of the machine - and immediately halted production. Intel warned it could cost $1 billion to clean up the mess. But shortly thereafter, Intel resumed shipments of the problem chips to PC makers that promised not to use them in a configuration that triggered the error.

That stumble could have been a boon for Intel's smaller microprocessor rival, Advanced Micro Devices Inc., but the fast turnaround likely prevented major losses in market share. AMD reports its first quarter results on Thursday.

Otellini said that Intel didn't see much of an effect from the March 11 disaster in Japan. That's because the company doesn't have factories in the country and because PCs are built around common standards that are easily met by suppliers outside of Japan. Japan is a major supplier of memory chips and key materials for making computer chips.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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