Intel reports 43% rise in profit
Intel, a technology industry bellwether, boosted the sector on Tuesday, reporting a 43 per cent rise in profits and strong and growing worldwide demand for its chips.
The group’s positive news at the opening of the technology earnings season was reinforced by IBM reporting higher sales and profits and Yahoo shares rising nearly 10 per cent in extended trading as the internet company beat Wall Street’s earnings expectations.
Intel gave a lift to PC manufacturers. It said revenues for its notebook chips were up 20 per cent and a prime driver of growth. “Notebooks...have really ignited in markets around the world and as notebook volumes grow, [laptop computer prices] will come down,” said Paul Otellini, chief executive.
Intel said third-quarter revenues of $10.1bn overall were 15 per cent higher than a year earlier. Sales also beat the analyst consensus of $9.6bn gathered by Reuters Estimates.
The world’s biggest chipmaker said net income of $1.9bn was 43 per cent higher than a year earlier and 46 per cent higher than the second quarter. Earnings per share of 31 cents beat analyst expectations of 30 cents and the 21 cents recorded a year earlier.
Intel shares rose nearly 5 per cent in after-hours trading to $26.74, 42 per cent above their low this year of $18.86 in March.
“A combination of great products, strong and growing worldwide demand and operational efficiency from our ongoing restructuring efforts led to record third-quarter revenue,” said Mr Otellini.
The company suffered a slump in revenues and profits in 2006 and the year-ago quarter’s revenues had been 12 per cent lower and profits 35 per cent lower than the 2005 quarter.
Intel has recovered with a line of dual-core and quad-core microprocessors based on its first new architecture in five years.
Manufacturing efficiencies and a restructuring programme have also helped to improve margins, which had fallen below 50 per cent.
The company also announced that Andy Bryant, its longest serving chief financial officer, was moving after 13 years to become chief administrative officer. This was “part of our long term management succession planning”, said Mr Otellini.
IBM, the world’s second biggest IT company, reported higher sales and profits, driven by a strong services business and a weak US dollar, which boosted sales overseas. The results were in line with most Wall Street estimates. Shares in IBM fell 1.3 per cent in after-hours trading.
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