Intel posts $1bn net, EU nets it all

But fines aside, there are signs of a turnaround

By Rik Myslewski in San Francisco, 14th July 2009

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Intel is digging itself out of the rubble caused by the economic implosion of late last year and early this year, announcing a 12 per cent revenue increase over its previous quarter - the company's most dramatic growth rate in 20 years.

In Tuesday's second-quarter earnings report (PDF), Intel announced that its revenue for the quarter was $8bn (£4.9bn), up $879m (£539m) from the previous quarter - though still down $1.4bn (£858m) from the same quarter in 2008.

In other words, business hasn't yet righted itself to pre-Meltdown levels, but the trend line is clearly pointing in the right direction.

In a statement released shortly before Tuesday's conference call with reporters and analysts, Intel president and CEO Paul Otellini said: "Intel's second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half."

Otellini was even more upbeat during the call, saying that "Our second-quarter results were clearly better than we had expected, with demand strengthening throughout the quarter."

Enterprise PC spending, however, is not yet joining the party. As Otellini put it, "Consumer purchases led the way, with a strong rebound in mobile-processor shipments." However, he added, "Enterprise PC volumes remain weak," and "We are not planning for a big refresh this year."

There was good news on the server front, though. Otellini pointed out that "Server-processor volumes were better than expected."

There was, however, one hefty turd floating in the earnings-report punchbowl: the €1.06bn ($1.45bn, £890m) fine imposed by the EU on Intel for anti-competitive behavior. Not counting that chunk of change, Intel's stated revenue resulted in a net income of $1bn (£613m); factoring in the fine, however, transforms that income to a $398m (£244m) loss.

Still, it may be argued that a corner may have been turned during the second quarter, with chips sales for the rest of the year looking rosier - so much so that some analysts asked if Intel would have sufficient inventory available should the global economy pick up faster than anticipated.

Otellini answered that the company's overall inventory position was strong. As he put it, "If you want parts, we got 'em." ®

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