SAN FRANCISCO – Intel Corp. (INTC) Tuesday reported first-quarter earnings down slightly from a year ago, suggesting that its profit declines are nearing an end. The world's largest chipmaker also forecast a wide second-quarter revenue range of $6.4 billion to $7.0 billion.
Santa Clara, California-based Intel said net income before acquisition-related charges was $1.0 billion, or 15 cents a share, compared with year-ago profit before charges of $1.1 billion, or 16 cents a share. Revenue rose to $6.8 billion from $6.68 billion.
On that basis, the results were in line with the 15 cents a share analysts polled by research firm Thomson Financial/First Call had forecast. Estimates ranged from 13 cents to 16 cents a share and revenue was forecast at $6.79 billion.
The quarter offered few surprises, analysts said, although its guidance for the second quarter was a little better than some expected. The midpoint of the $6.4 billion to $7.0 billion range suggests flat revenue compared with the first quarter.
"The second quarter is a seasonal trough for the PC business and to indicate that the second quarter may be flat on a relative basis is fairly bullish," said Dan Scovel, an analyst at Needham & Co.
REVENUE RISES FOR FIRST TIME IN FIVE QUARTERS
In another positive sign, average prices for its chips rose in the fourth quarter, thanks to sales of higher-priced Pentium 4 chips. Overall, revenue increased year-over-year for the first time in five quarters.
Analysts had forecast second-quarter earnings of 15 cents a share, within a range of 11 cents to 18 cents, on revenue of $6.67 billion, a decline of about 1.8 percent from first-quarter levels.
In trading after the close, Intel shares rose to $31 from its regular close of $29.45. Shares of Intel rose $1.34 to $29.45 on the Nasdaq before results were released, which came after the close of regular U.S. trading.
Intel announced on Monday a legal settlement with Intergraph Corp., bringing to a close a long-running legal battle. That settlement resulted in a charge to the first quarter of $155 million, which reduced per-share results before acquisition-related charges of 14 cents, Intel said.
Andy Bryant, Intel's Chief Financial Officer told Reuters in an interview that the first quarter was a seasonal one, meaning it followed the usual yearly pattern in which the first quarter revenue declines from the the fourth, which benefits from holiday sales.
However, there doesn't appear to be an overall pickup coming anytime soon.
"In terms of macroeconomic trends, we still haven't seen any signs of a recovery," Bryant said, adding that sales of its server chips were again strong in the first quarter, with unit shipments setting a record.
"We'll see some uplift in the second half," Bryant said. That is consistent with past trends. Typically, the second half of the year is stronger for the personal computer industry.
"The big issue is the elusive (economic) recovery," said Ashok Kumar, an analyst at US Bancorp Piper Jaffray. "You may not see any action until next year but the company is executing well and they have a good product road map."
Intel said that unit shipments of its microprocessors were little changed from those in the fourth quarter, including shipments for Microsoft Corp.'s Xbox video game console. Shipments of chipsets, which are the guts of a PC, were lower than in the fourth quarter, while motherboard unit shipments were higher than in the prior quarter.
First-quarter shipments of flash memory chips were lower than in the fourth quarter.
Intel stock has declined 6.4 percent this year, compared with a 16 percent rise in the Philadelphia Semiconductor Index.