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By | Ashlee Vance 19th April 2005 23:15

Intel rides mobile express to strong Q1

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Intel rumbled to a strong first quarter, posting a surge in revenue on higher than expected mobile processor sales, the company said today.

Intel flashed investors with first quarter revenue of $9.4bn - a 17 per cent rise year-over-year. This revenue total came in at the high-end of Intel's mid-quarter forecast delivered in March. Net income surged as well, hitting $2.2bn. That figure was 25 per cent higher than the $1.7bn posted in the same period last year. Earnings per share came in at 34 cents, which was also an improvement over last Q1's 26 cents per share.

"The first quarter was a solid start for the year," said Intel's CFO Andy Bryant during a conference call with analysts.

Intel posted year-on-year revenue gains in all of its major businesses, including chips, flash memory and chipsets and motherboards. It emphasized both laptop processor sales and cell phone processor sales as being very strong in the quarter.

The company benefitted from manufacturing efficiency and a subsequent boost in gross margins. The first quarter's gross margin percentage came in at 59.3 per cent - well above the forecasted 57 per cent.

Chip sales hit $6.9bn up from $6.2bn in the same period last year. Flash sales rose to $578m from $417m last year, and chipset and motherboard sales rose to $2.0bn from $1.5bn last year.

Overall, Intel's results surpassed those of rival AMD, which reported its first quarter figures last week. Both companies noted strong processor sales. AMD, however, saw a huge drop in its flash memory business, while Intel increased sales.

Intel boss Paul Otellini wasn't shy about rubbing in the AMD drubbing.

"I think the numbers speak for themselves (regarding) the market dynamics between the two companies," he said. Adding later, that customers are will to "pay a premium for Intel products."

Otellini's aggressive comments followed an analyst's question about AMD's apparent technology lead over its longtime rival. AMD this week will roll out the first mainstream dual-core x86 server processor some 8 months before Intel is expected to have comparable product.

Analysts were pleased to hear Intel's positive take on the worldwide economy after IBM last week sparked concerns that tech spending had fallen off in March.

"We saw nothing that was noteworthy through any of the first quarter," Bryant said. "It is basically business as usual in a pretty good environment."

The only real dose of bad news for Intel during the first quarter came from the Americas region where revenue fell to $1.97bn from $2.16bn the year earlier. By contrast, revenue in Asia surged to $4.40bn from $3.28bn and revenue in Europe rose to $2.11bn from $1.93bn.

Intel expects second quarter revenue to come in between $8.6bn and $9.2bn. ®

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