Intel Sets Earnings Season Pace With Record Q2 Profits

Intel enjoyed "the best quarter in the company's 42-year history," reporting record earnings of $2.9 billion on revenue of $10.8 billion for the second fiscal quarter of 2010, the chip giant said Tuesday.

"The PC and server segments are healthy and the demand for leading-edge technology will continue to increase for the foreseeable future," Intel CEO Paul Otellini said in a statement.

Intel's second-quarter revenue was up $466 million from the first quarter of this year and up a whopping $2.7 billion as compared to the second quarter of 2009, arguably the trough of the global economic recession.

Net income was up $445 million sequentially and up $3.3 billion year-over-year -- although the year-ago quarter included a $1.45-billion fine levied against Intel by the European Commission following an anti-trust ruling. But even subtracting the fine from the second quarter of 2009, Intel's profits in its just-concluded quarter were still up a heady $1.8 billion, or 175 percent, year over year."

Intel's gross margin of 67 percent for the second quarter exceeded the Santa Clara, Calif.-based company's expected range of 62 to 66 percent as projected following the first quarter of 2010. Earnings per share were 51 cents, up 8 cents versus the first quarter and up 58 cents versus the year-ago quarter.

Operating income for the quarter was $4 billion, up $533 million sequentially.

Intel said in a statement that it had record mobile microprocessor revenue in the second quarter. The company's PC Client Group revenue was up 2 percent sequentially. The world's leading microprocessor maker also said enjoyed record sales of its server chips, with its Data Center Group revenue up 13 percent from the first quarter.

And the introduction of the Apple iPad doesn't seem to have diminished the market for netbooks -- or at least not for Intel's netbook-friendly Atom line of products. Intel reported that second-quarter Atom microprocessor and chipset sales amounted to $413 million, up 16 percent sequentially.

Overall, Intel said the average selling price (ASP) of its processors was "slightly up" from first-quarter ASPs. The chip giant said it spent $3.25 billion on R&D and MG&A in the second quarter, about $150 million more than expected ahead of the quarter.