Intel Corp. said its second-quarter profit fell 3.2%, the latest
fallout from a personal-computer slump that is hurting much of the
chip sector.
But the company also projected far better revenue and margins
than analysts had expected for the third quarter, sending shares up
7.8% to $32 in after-hours trading.
The big microprocessor maker, which said revenue declined 4.6%
during the period ended in June, lowered its forecast for the year,
saying it now sees revenue down about 1%. Intel had projected in
April that 2015 revenue would be roughly flat with the prior
year.
Intel said its gross profit margin, a closely watched metric
that reflects factors like chip pricing and manufacturing
productivity, was 62.5% in the second quarter. The company had
previously projected that figure would be 62%, plus or minus a
couple of percentage points.
The Santa Clara, Calif., company is known for manufacturing the
silicon calculating engines used in the vast majority of computers.
That business has suffered in recent years as consumer spending
shifted to mobile devices that use competing chip technology.
PC sales strengthened somewhat in 2014. One reason is that
companies bought PCs with new operating systems in response to
Microsoft Corp.'s decision to phase out support for its aging
Windows XP software.
But that tailwind faded this year, a trend made clear in March
when Intel slashed its first-quarter outlook. Intel later reported
a 3% gain in profit for that period on flat revenue.
Further negative signs about weakening PC demand include reports
by two research firms last week. Gartner Inc. estimated that unit
shipments declined 9.5% in the second quarter, while rival IDC said
shipments fell 11.8%.
Advanced Micro Devices Inc., which sells microprocessors that
are compatible with Intel's, on July 6 warned that it would report
second-quarter revenue was 8% lower than it reported for the first
period. AMD previously had projected a 3% sequential decline; the
company is scheduled to report its full results Thursday.
Mr. Krzanich has moved to cut costs and revamp the company's
senior management ranks. President Renee James, who took the
position at the same time he was appointed, has said she plans to
leave the company at the end of the year to take a CEO job
elsewhere.
In all, Intel reported a profit of $2.71 billion, down from $2.8
billion a year earlier. Earnings were flat on a per-share basis.
Revenue declined to $13.2 billion from $13.83 billion.
Analysts polled by Thomson Reuters had projected per-share
earnings of 50 cents on revenue of $13.04 billion.
For the third quarter, Intel projected revenue of $14.3 billion
and a gross profit margin of 63%, plus or minus a couple of
percentage points. Analysts had estimated a 61.33% margin on
revenue of $14.08 billion. according to Thomson Reuters.
Write to Tess Stynes at tess.stynes@wsj.com and Don Clark at
don.clark@wsj.com
Access Investor Kit for Advanced Micro Devices, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0079031078
Access Investor Kit for Gartner, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US3666511072
Access Investor Kit for Intel Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4581401001
Subscribe to WSJ: http://online.wsj.com?mod=djnwires