Intel, TI Post Sizable Gains in 2nd Quarter
Semiconductor maker Intel Corp. reported second-quarter profit rose 59% despite a drop in demand for some of its older-generation products, while Texas Instruments Inc. said its second-quarter profit more than tripled, fueling active trading on optimism that computer makers will benefit from growing earnings this year.
In a statement issued after markets closed, Santa Clara, Calif.-based Intel, which makes microprocessors and other computer products, reported net income of $1.6 billion, or 92 cents a share, compared with $1 billion, or 59 cents a share, a year ago. The per-share figures for both periods reflect a 2-for-1 stock split that took effect earlier this week. Revenue rose to $6 billion from $4.6 billion.
The earnings figure topped analysts’ consensus estimate of 90 cents per share. As the company had warned on May 30, revenue and earnings in the seasonally slower second quarter were down from the first quarter because of a combination of weakness in Europe and the introduction of new microprocessors.
“Strong microprocessor shipments in the first quarter led to some inventory correction in the second quarter as the industry prepared for a rapid transition to [Pentium] processors with MMX [multimedia] technology,” Intel Chairman Andrew Grove said.
Intel’s performance is closely watched because its microprocessors are the brains of 85% of all personal computers. Its financial results are regarded as a bellwether for all PC-related industries.
In addition to the traditionally lower demand in the second quarter, Intel cited the weaker demand in Europe affecting the results.
Analysts said Intel also was affected by a general slowdown in the PC market. Consumers and businesses are likely postponing purchases until fall because of expected Intel price cuts in the face of increasing competition from Advanced Micro Devices and Cyrix.
Intel shares rose $2.16 to $80.91 in regular trading on Nasdaq, then traded at $81.50 after hours.
Intel said it expects third-quarter revenue to be unchanged to slightly higher than the $6 billion it posted in the second quarter, while gross margins will be flat to slightly lower than the second quarter’s 61%.
Texas Instrument’s second-quarter net income soared to $249 million, or $1.26 a share, from $76 million, or 39 cents a share, in the same period last year.
TI’s powerful earnings report took Wall Street by surprise and shares of the Dallas-based semiconductor giant jumped $12 to close at an all-time high of $109.50 on the New York Stock Exchange, where it was one of the most actively traded issues.
Its profit from continuing operations and excluding special items jumped to $213 million, or $1.07 a share, from $41 million, or 21 cents a share. Revenue rose 7% from $2.4 billion to $2.56 billion.
Analysts had forecast earnings per share of about 87 cents.
“This was a very good quarter,” President and Chief Executive Thomas Engibous said in a statement. “We realize the opportunity for TI is significant, especially as digital-signal processing becomes the core element in a growing number of electronic products.”
Digital-signal processors, used primarily in wireless communications and the audio and video functions of electronic equipment, are at the core of TI’s strategy.
At a Glance:
Ascend Communications Inc. said second-quarter profit rose 41%, lagging expectations, before a charge for the purchase of Cascade Communications Corp. resulted in a final loss. Ascend’s profit from operations rose to $62.4 million, or 31 cents a share, from $44.4 million, or 23 cents, a year earlier. The results reflect the combined earnings of Ascend and Cascade, with year-earlier figures restated to include Cascade.
* More earnings: D2, D6
