SAN FRANCISCO – Intel Corp. (INTC), the world's largest maker of computer chips (search), Tuesday posted a higher net profit helped by notebook computer demand, but shares dipped more than 3 percent on what one analyst said could be profit-taking.
Net income rose to $2.03 billion, or 33 cents per diluted share, compared with the year-earlier quarter's $1.76 billion, or 27 cents per diluted share. Revenue rose to $9.2 billion from $8.0 billion.
Wall Street analysts on average had been expecting earnings of 33 cents per diluted share on revenue of $9.2 billion, according to Reuters Estimates.
Earnings in the quarter reported were boosted by a previously disclosed 2-cent-per-share tax-related gain. The year-earlier quarter had included a tax-related gain of 1.3 cents per share.
Looking ahead, the company said it anticipated third-quarter revenue in a range between $9.6 billion and $10.2 billion.
Analysts surveyed by Reuters Estimates had forecast third-quarter revenue of $9.77 billion on average, with predictions ranging from $9.45 billion to $10.30 billion.
Intel Corp. CFO Andy Bryant said Tuesday that demand for personal computers is healthy, giving him confidence his company can deliver double-digit revenue growth in the second half of 2005.
"The health of the market is good," Bryant said in an interview following Intel's quarterly financial report. "We see that momentum continuing strongly in the back half of 2005 with year-over-year growth in the double digits," he said.
But he said capacity limitations prevented Intel from fully meeting existing customer demand for chipsets used in notebook, desktop and server PCs. "Right now demand is strong enough that I haven't been able to build up inventory," he told Reuters.
Shares fell 3.6 percent in after-hours trade to $27.68 on Inet.
"Overall it's a very upbeat number," said Apjit Walia of RBC Capital Markets, referring to financial targets for the third quarter. "Of course the stock has run up a lot over the last few months and people out there might use the news to take some profit, but if that's so, it will give people an attractive entry point."
Intel raised its capital spending expectation for 2005 to approximately $5.9 billion, plus or minus $200 million, compared with the previous expectation of $5.4 billion to $5.8 billion, to support higher expected demand.
"The only thing I can find that is perhaps a concern is that gross margin in the second quarter did post below consensus expectations. But I wouldn't be overly worried about it, given the gross margin guidance for the third quarter, and the remainder looks good. The outlook, at least at first blush, looks positive," said Bruce Bartlett, director of growth equities at Lord Abbett & Co.
Intel, which makes the microprocessors chips that function as the brains of more than 80 percent of the world's personal computers, has been benefiting from faster growth in chips used in notebook computers.