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Intel delivers strong quarter, teases smartphone chips

By business unit, Intel's results are mixed. PC client, data center, and other products all fall compared to a year ago.

Intel delivered strong first quarter results, upped its outlook for the second quarter and said that it will power its first smartphones shortly. (Update: CEO Paul Otellini confirmed that the company's first smartphone is expected to launch this week.)

The chip giant reported first quarter earnings of $2.7 billion, or 53 cents a share, on revenue of $12.9 billion. Wall Street was expecting earnings of 50 cents a share on revenue of $12.84 billion.

As for the outlook, Intel projected second quarter revenue of $13.6 billion, give or take $500 million. Wall Street was looking for sales of $13.45 billion. Intel projected gross margins of 62 percent to 63 percent, which was better than expected. For 2012, Intel is projecting gross margins of 64 percent to 65 percent. Intel will spend about $12.5 billion on capital expenditures.

The company said that it is set up for strong second half growth.

By business unit, Intel's results were mixed. PC client, data center and other products all fell compared to a year ago. Software was down too.

CFO Stacy Smith said in his commentary on the quarter:

Similar to the fourth quarter our business was negatively impacted by hard drive shortages and the resulting additional reduction of inventories across the supply chain. Despite this reduction in inventory levels, it is our belief that the shortage did not impact actual sales of personal computers in the first quarter with demand trends playing out as expected. We believe that the hard drive supply situation improved as we progressed through the first quarter and we are not forecasting any negative impacts to our business going forward.

Going into the first quarter results, analysts noted numerous wild cards. Among the big ones:

  • Intel's mobile strategy.
  • Windows 8 launch effects.
  • And ultrabook sales.

By the numbers for the first quarter:

  • Cash and equivalents was $4.43 billion, down from $5.06 billion a year ago on Dec. 31.
  • Inventory was $4.49 billion, up from $4.1 billion as of December. 31.
  • Asia Pacific revenue was 57 percent of sales with Americas at 20 percent. Europe checked in at 14 percent of revenue with Japan at 9 percent.
  • Intel ended March 31 with 100,800 employees.

This story was originally posted as "Intel delivers strong Q1, ups outlook, eyes smartphone market" on ZDNet's Between the Lines.