Upbeat Intel bounces back

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Intel, the world’s biggest chipmaker, on Tuesday staged a comeback after three disappointing quarters, with profits and revenues for its September quarter beating Wall Street expectations.

With a new product line and the technology lead regained from rival Advanced Micro Devices, Intel reported profits 47 per cent higher than the second quarter and revenues up 9 per cent. The Silicon Valley company said revenues were $8.7bn, ahead of analysts’ consensus of $8.6bn, while profits of $1.3bn or 22 cents per share were ahead of analyst expectations of 17 cents.

Intel shares, down 3.2 per cent at the close in New York at $20.90 after a broker downgrade, were up more than 1 per cent in after-hours’ trading on the better-than-expected results. Intel introduced processors for servers, desktop and notebook computers over the summer that featured two cores or “brains” and were based on its first new architecture in five years.

Paul Otellini, chief executive, said it was shipping four-core chips on smaller, more cost-effective 65-nanometre circuitry and would introduce a new architecture every two years – “a pace we haven’t seen in a long time”.

AMD, which has beaten Intel to processor landmarks in recent years, is yet to ship on 65nm and does not plan a quad-core chip until the middle of next year.

Mr Otellini said he was pleased with the third-quarter performance “with record mobile and server processor shipments, strong manufacturing execution, industry acclaim for our new products and quad-core processors now extending our leadership this quarter”.

Intel reported restructuring charges of $98m – the result of a 90-day strategic review of the company that will reduce the global workforce to 95,000 by the end of the year, down 5 per cent from the end of 2005.

Intel revealed the transition to its new line of dual-core processors had forced it to write off $100m of older processor inventory. Analysts had been concerned at high levels of inventory, and Intel has been cutting prices to shift older processors.

Gross margins fell below 50 per cent, to 49.1 per cent, in line with Intel’s forecast in July.

Revenues were 12 per cent lower and profits 35 per cent lower than the third quarter of 2005, Intel’s last strong quarter.

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