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October 18, 2011 11:53 pm
Intel beat Wall Street expectations with record quarterly revenues and profits as sales of its processors for data centres and notebook PCs boomed.
However, sales of its low-power Atom microprocessors fell 32 per cent as the netbook market fell sharply in the face of competition from tablets such as Apple’s iPad 2.
The world’s biggest chipmaker by sales reported revenues of $14.3bn, well ahead of the consensus of analyst forecasts of $13.9bn, while profits of 65 cents a share beat expectations of 61 cents.
Intel shares rose as much as 5 per cent to $24.60 in extended trading in New York on the news.
The Silicon Valley company has benefited from the growing strength of emerging markets, enterprises updating equipment and the roll out of servers in new data centres, despite growth in the consumer PC and notebook market slowing.
Stacy Smith, chief financial officer, said: “It was a phenomenal financial quarter.
“We are seeing emerging markets driving significant unit growth and ... in the data centres, as we see this explosion of devices that are connecting to the internet driving the build out of the internet cloud, we think we are uniquely positioned to benefit from that trend.”
On the sharp decline in Atom revenues, Mr Smith said consumers were moving away from netbooks and were more attracted to notebooks – now available at lower prices. He told the Financial Times that tablets were also eating into the netbook market and had become “the new refresh device” when consumers looked to upgrade their equipment.
The company has yet to make an impact with its chips in tablets or smartphones, while the first ultrabooks – thinner, lighter notebooks aimed at rivalling tablets – are only starting to appear in the current quarter. Paul Otellini, chief executive, said more than 70 models were in the pipeline.
Revenues in Intel’s core PC client group were up 22 per cent year-on-year to $9.4bn. This compares to just 3.6 per cent unit growth in PC shipments in the third quarter, as reported by the IDC research company last week.
Intel may have benefited from the travails of its main rival AMD, which warned last month that growth in its third-quarter revenues would be half of what it expected after problems at GlobalFoundries, where the chips are manufactured.
Intel’s record overall revenues of $14.3bn, up 28 per cent on a year earlier, included contributions from the acquisition of the McAfee security software company and chipmaker Infineon’s mobile business. However, Mr Smith said revenue growth was still 17 per cent excluding the acquisitions.
Intel forecast that revenues would grow to about $14.7bn in the fourth quarter, ahead of analyst forecasts of $14.2bn, according to Bloomberg, with gross margins of about 65 per cent. The company has authorised a further $10bn to buy back shares.
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