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Intel posts $2.9 billion profit, cites strong demand

The chipmaker surges past analysts' expectations for the second quarter for what it says was "the best quarter" in its 42-year history.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
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Brooke Crothers
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Intel's second-quarter profit surged past the dismal earnings reported in the same period last year.

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For the quarter, which ended period ended June 26, Intel earned $2.9 billion, or 51 cents a share, one of the biggest profit showings in its history. And it was a stark contrast with the loss of $398 million, or 7 cents per share, posted a year ago. Last year's results were pushed down by a $1.45 billion charge as a result of a European Commission antitrust fine.

Analysts had been expecting second-quarter earnings of 43 cents per share.

Revenue for the world's largest chipmaker was $10.8 billion, up 34 percent year over year.

"Strong demand from corporate customers for our most advanced microprocessors helped Intel achieve the best quarter in the company's 42-year history," said Paul Otellini, Intel president and CEO, in a statement.

Highlights of the second quarter include the following (note that these are quarter-over-quarter sequential comparisons, not year-over-year comparisons):

  • Gross margin--a crucial profit indicator--was 67 percent, 3 percentage points higher than the midpoint of the company's expected range of 62 percent to 66 percent.
  • PC Client Group revenue was up 2 percent sequentially, with record mobile microprocessor revenue.
  • Data Center Group revenue was up 13 percent sequentially, with record server microprocessor revenue.
  • Intel Atom processor and chipset revenue was $413 million, up 16 percent sequentially.
  • The average selling price (ASP) for microprocessors was slightly up sequentially.
  • R&D plus MG&A (mergers and acquisitions) spending was $3.25 billion, higher than the company's prior expectation of approximately $3.1 billion.

Intel said the outlook for the third quarter includes revenue of $11.6 billion, plus or minus $400 million, and a gross margin of 67 percent, plus or minus a couple percentage points.

For full-year 2010, gross margin is expected to be 66 percent, plus or minus a couple percentage points. The company's prior expectation was 64 percent, plus or minus a couple percentage points.