Intel’s Earnings Point to a Turnaround
Intel Corp. reported Tuesday that first-quarter earnings fell slightly from a year ago, suggesting that its profit declines are nearing an end. The world’s largest chip maker also forecast a wide second-quarter revenue range of $6.4billion to $7billion.
Santa Clara, Calif.-based Intel said net income before acquisition-related charges was $1billion, or 15 cents a share, compared with year-ago profit before charges of $1.1billion, or 16 cents a share. Revenue rose to $6.8billion from $6.68billion.
On that basis, the results were in line with the 15 cents a share analysts polled by research firm Thomson Financial/First Call had forecast. Estimates ranged from 13 cents to 16 cents a share and revenue was forecast at $6.79billion.
Analysts had forecast second-quarter earnings of 15 cents a share, within a range of 11 cents to 18 cents, on revenue of $6.67billion, a decline of about 1.8% from first-quarter levels.
Intel announced Monday a legal settlement with Intergraph Corp., bringing to a close a long-running legal battle. That settlement resulted in a charge to the first quarter of $155million, which reduced per-share results before acquisition-related charges of 14 cents.
Andy Bryant, Intel’s chief financial officer, said that the first quarter was a seasonal one, following a seasonal fourth quarter. That seasonality is still intact, albeit based on lower economic levels because of the slowing U.S. economy.
Intel shares rose $1.40 to $29.51 before the results were released after the close of regular Nasdaq trading. In after-hours trading, Intel shares rose to $31.
In other technology earnings reports Tuesday:
* Motorola Inc.’s first-quarter loss narrowed to $449million on lower expenses as revenue dropped 22% at the world’s second-largest mobile-phone maker. The loss, the company’s fifth straight, was 20 cents a share, compared with $533million, or 24 cents, a year earlier. Sales declined to $6.02billion, the lowest in seven years, from $7.68billion.
Motorola Chief Executive Christopher Galvin repeated his prediction that the company will be profitable, excluding severance and other costs, in the second half by increasing sales and reducing costs. Some investors said he may have the elements in place for a rebound, such as new phones and able deputies. Last year, Galvin misjudged demand for handsets and semiconductors.
Excluding exited businesses and severance, acquisitions and investment loss costs, the company said its loss would have been $174million, or 8 cents a share, compared with $211million, or 10 cents, a year earlier.
On that basis, the results don’t conform to generally accepted accounting principles.
Analysts expected a loss of 12 cents a share on revenue of $6.07billion, the average estimates from a Thomson Financial/First Call poll. In January, the firm forecast a loss of 11 cents to 14 cents a share on sales of $6billion to $6.1billion. Shares of Schaumburg, Ill.-based Motorola rose as much as 35 cents to $15.35 in after-hours trading following the report. They rose $1.34 to $15 on the New York Stock Exchange and have climbed 9.1% in the last year.
* RealNetworks Inc. posted a quarterly net profit for the first time in more than two years as the Internet media software and services pioneer built momentum behind its consumer subscription business. RealNetworks, known for its RealOne software for playing audio and video over the Internet, said its first-quarter net profit was just more than $1million, or 1 cent a share, compared with a loss of $24.4million, or 15 cents a share, a year earlier.
That was in line with the consensus Wall Street estimate of 1 cent a share as reported by earnings tracking firm Thomson Financial/First Call. It was the first time since the fourth quarter of 1999 that Real has posted a net profit. Acquisitions forced it to recognize charges and post a series of net losses, though excluding those costs the company was profitable.
Excluding more than $2.6million in expenses like non-cash losses in a joint venture and amortization of stock compensation, Real said adjusted cash earnings were nearly $3.7million, or 2 cents per share. Revenue at the Seattle-based company was $47.3million, down from $50.4million a year earlier and within the range of $46million and $48.5million expected by analysts.
Shares in Real rose 44 cents, or 6.5%, to $7.24 on Nasdaq. The stock held near that level in after-hours trading after the earnings report was released.
* Vitesse Semiconductor Corp.’s fiscal second-quarter loss widened as the communications chip maker’s sales declined 65%. The loss for the quarter ended March 31 widened to $44.4million, or 22 cents a share, from $11.2million, or 6 cents, in the year-earlier period. Sales fell to $42.1million from $121.8million.
The Camarillo company’s revenue has dropped from the year-earlier period for four straight quarters. Vitesse closed up 90 cents at $9.01 on Nasdaq.
*
Reuters and Bloomberg News were used in compiling this report.
