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Intel at ease with economic chaos

Q2 a grower

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The economy looks bleak as can be, but Intel doesn't care. The chip maker today reported a record second quarter haul and expects the good times to keep on rolling throughout the year.

Intel's Q2 revenue notched in at $9.5bn, which is a healthy 9 per cent rise over last year's revenue total for the same period. Net income of $1.6bn beat out last year's Q2 figure by a whopping 25 per cent thanks to cost-cutting and lower than expected charges. For example, Intel's restructuring expense for the quarter came in at $96m instead of $250m as previously forecast, and the company's tax rate was lower.

"Our second quarter results were very positive on a number of fronts," said Intel CEO Paul Otellini, during a conference call with analysts.

According to Intel, demand for its silicon was high all around the globe, leading to record shipments of chips and chipsets. On the server side, Intel saw the most interest for its chips that fit into dual-processor servers. On the PC and laptop front, notebook processor sales once again stole the show with demand surging for compact systems. The laptop chips, however, did hurt margins a bit, since customers proved more interested in lower-priced notebooks than Intel had expected.

Looking at the economy as a whole, Otellini said, "We are very aware of the global economic issues dominating the financial markets these days." But high oil prices, inflation and struggling financial services companies don't seem to be wounding Intel. "We see continued, healthy demand for our products."

Intel's good cheer will prove welcome to a technology sector that's imploding, as a number of huge names have seen their shares slump to 52-week lows.

For the third quarter, Intel expects revenue to come in between $10.0bn and $10.6bn.

Investors kicked Intel shares higher by about 1 per cent, at the time of this report, in after-hours trading. ®

Bootnote

During the conference call, Otellini was asked to comment on the economic climate in China. The CEO noted that the massive earthquake impacted a number of large businesses during the quarter and that sales should pick up thanks to the Olympics and rebuilding efforts. Again touching on the Olympics, Otellini said, "There's WiMax trials in China for the yachting events, and a lot of excitement around that."

Ah, still plugging WiMax. Perhaps boating through algae can save the wireless technology yet.

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