Firms come through when chips are down
After a quarter of a widely reported slump in PC sales, the industry leaders are starting to report their quarterly figures--and for many, the lumps aren't as bad as financial analysts had feared.
Despite recent announcements of losses and layoffs by many of its competitors in the chip industry, Intel's revenue for the first quarter ending March 31 grew 31 percent over the same period a year ago to $4.64 billion. Earnings per share climbed to $1.02, compared to $0.98 for the fourth quarter of 1995.
Although profits were virtually flat, the results still exceeded analysts' predictions that earnings per share would stay below a dollar and that revenues would drop below the $4.58 billion reported in the final quarter of last year. As a result, Intel stock was up today, rising to 64-1/8 by noon EDT.
And while many competitors suffered this quarter as more business was diverted Intel's way, Chips and Technologies bucked the trend and reported a jump in its net income.
Chips and Technologies is a major supplier of graphics chips and subsystems. The company has virtually locked up the graphics chip market for notebook PCs and supplies to top-tier notebook PC vendors, including Toshiba and IBM. Its net income for the quarter ended March 31 came in at $9.8 million, or $0.45 per share, up 75 percent over the previous quarter and up 364 percent over the same quarter last year. Still, the company's revenues were down 4.6 percent from the fourth quarter, to $36.5 million.
Workstation, server, and software vendor Sun Microsystems, meanwhile, seemed unaffected by the PC slump. It announced record revenues for its quarter ending March 31. The company reported revenue of $1.840 billion, up 22 percent from the same period a year ago. Earnings per share for the fiscal third quarter also set a record at $0.73, up from $0.54 for the same period a year earlier. The company attributed the results to a series of recent Internet and intranet announcements.
But the quarterly results of two more industry heavyweights are yet to come this week, and analysts are relatively glum about both.
While analysts predict that IBM first-quarter earnings will be up 10 percent from a year ago, they expect revenue to reflect a waning demand for PCs and a stronger U.S. dollar that will dampen the results of its overseas sales. IBM is expected to report its earnings tomorrow.
IBM reported earnings of $1.29 billion or $2.12 a share on sales of $15.7 billion for its first quarter last year.
The industry is also holding its breath, however, for Microsoft to make its earnings announcement Thursday. Analysts are speculating that the company will post revenue and earnings below expectations, dragged down by the sluggish PC market.
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