Sales softer than expected; says margin to drop in 3Q
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Chip giant Intel reported Tuesday second-quarter earnings of 27 cents per share, meeting Wall Street expectations, on $8.05 billion in revenue, which fell slightly below what analysts expected.
According to Thomson Financial/First Call, analyst consensus had anticipated 27 cents per share on $8.1 billion in revenue.
Results were in line with Intel's guidance during a midquarter update, when the company said it expected its sales for the quarter to range between $8 billion and $8.2 billion.
"Intel continued to post strong year-over-year results in the second quarter as our microprocessor business followed seasonal trends and our communications business grew nicely, led by flash memory," said Intel CEO Craig Barrett in a statement. Barrett said the company would look to "expand our presence" in chipsets"in addition to flash memory"in the second half of 2004.
In its statement, Intel issued third-quarter guidance for sales in the $8.6 billion to $9.2 billion range"a notable uptick to the $8.76 billion in revenue that had represented the consensus estimate. However, the company said it expects gross margins of 60 percent for the third quarter, plus or minus a couple of points, compared with previous expectations of about 62 percent, plus or minus a couple of points.
The Santa Clara, Calif., company said expected lower margins would result from faster-than-expected growth in lower-margin products such as chipsets, motherboards and flash memory. Intel was expected to provide more details on its results and expectations in an evening conference call with financial analysts.