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Intel Posts Flat Q2 but Promises Strong Second Half.

Intel Corp warned last time that its second quarter revenue would be flat or slightly down on first quarter figures - and so it proved yesterday. The company reported revenue of $6.75bn for the quarter, up 14% from the $5.93bn it posted in the same period last year, but a 5% decline sequentially. Net income was $1.75bn, or $0.51 per diluted share, up 55% on last year, but just missing the $0.53 that analysts had been expecting, and down 11% sequentially. Intel posted income of $1.17bn or $0.33 per diluted share in the same quarter last year.

President and CEO Craig Barratt said the weakness was "seasonal" and said he expected to see a strong second half to the year. Most of that strong growth will be in the final quarter, however, and Intel said it anticipated that its third quarter would see only a slight improvement in revenue.

During the quarter, Intel saw microprocessor and motherboard units down sequentially, and chipset units flat. Embedded processor and microcontroller units were up, and flash memory shipments were strong. Unit shipments of Fast Ethernet connections and shipments were also up.

Intel said it regained market ground at the low-end "value PC" segment during the quarter due to strong Celeron sales - and at the expense of its rival Advanced Micro Devices Inc, due to report its own figures today. Intel said it also made good progress with its transition from the Pentium II to the Pentium III. By the next quarter it expects the Pentium III to have overtaken its predecessor to take over the number one selling processor slot.

Gross margins remained flat at 59%, despite a lower average system cost, but should rise slightly again next quarter, with Intel now forecasting a 60% gross margin for the whole year. Margins were maintained due to cost improvements and manufacturing efficiencies, Intel said. Shipments of high-end Xeons should pick up late in the year, once eight way shipments begin (see separate story).
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Publication:Computergram International
Geographic Code:1USA
Date:Jul 14, 1999
Words:335
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