SAN JOSE, Calif. – Second-quarter profits at Intel Corp. fell 94 percent, but the world's leading maker of computer chips beat Wall Street's expectations Tuesday.
In the three-month period ending June 30, Intel reported a net profit of $196 million, or 3 cents per share, down from $3.14 billion, or 45 cents per share, in the year-ago period. Revenue was $6.3 billion, down from $8.3 billion a year ago.
Excluding one-time events, Intel would have earned $854 million, or 12 cents per share. Analysts surveyed by Thomson Financial/First Call were expecting 10 cents per share.
Intel shares rose 77 cents to $29.90 on the Nasdaq Stock Market before the earnings report was released. The stock fell to $29.19 in the extended trading period.
Intel's president and CEO, Craig Barrett, said the microprocessor business "performed better than expected," though sales of communications and flash memory chips were soft.
Silicon Valley rival Advanced Micro Devices Inc. said last week that it also was being hit hard by low demand for flash memory chips, which are used in devices other than PCs, such as cell phones and digital cameras.
Barrett said Intel would speed up its rollout of the high-end Pentium 4 processor into "all mainstream PC price points by the end of the year." With Microsoft rolling out its latest and more advanced operating system, Windows XP, Intel wants to give consumers another reason to upgrade.
However, Intel said the uncertain economic climate made it difficult to predict short-term demand. Revenue in the current quarter is expected to be between $6.2 billion and $6.8 billion. That is in line with the consensus Wall Street estimate of $6.5 billion, according to Thomson Financial/First Call.
The company did not estimate its earnings range, however, and said it would update its financial picture on Sept. 6.
While Intel's microprocessor shipments rose from the first quarter, the average selling price declined because of the price war that AMD has said is cutting into its bottom line. Intel's gross margins for the year are expected to be around 49 percent, off slightly from a previous forecast of 50 percent.
For the first half of 2001, Intel earned $681 million, or 10 cents per share, on sales of $13 billion. Those figures all dropped from the first half of 2000, when net profit was $5.8 billion, or 83 cents per share, on sales of $16.3 billion.