Intel Q1 Earnings Reflect Expansion Of Emerging Markets, Channel Business

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Intel on Tuesday reported record revenue and earnings-per-share (EPS) figures in its financial results for Q1 2011, and Intel CEO Paul Otellini said Intel’s channel partners are essential to its product strategy in the key emerging markets segment.

Intel said its first quarter revenue totaled $12.8 billion, up from $10.3 billion, or 25 percent, from the same quarter last year. The company posted net income of $3.2 billion, up from $2.4 billion, or 29 percent, year-over-year.

Otellini said in a statement that Intel’s Q1 results, combined with its guidance for the second quarter, have positioned the company to achieve 20 percent annual revenue growth. Otellini also re-iterated his belief that Intel’s Sandy Bridge platform is the best product Intel has ever brought to its customers, which he said Intel was only able to do with aid from channel partners and their ability to adjust to Intel’s Sandy Bridge recall in February.

“The ramp in the channel was the fastest we’ve ever seen and sell-through has been robust as well,” Otellini said. “Rapid recovery from Cougar Point issues last quarter enabled a much faster ramp for Sandy Bridge than previously expected in January.”

Otellini said Intel’s customers in Q1 replenished approximately half of the inventory depleted in Q4 primarily with Sandy Bridge products. He said Intel’s PC client business grew 17 percent from last year.

Otellini said he disagrees with analysts who forecast sluggish returns for the overall PC market, and said that while some distribution channels such as retail offer greater visibility, other channels that aren’t as visible are driving Intel’s growth in emerging markets. “The channel strength for Sandy Bridge is definitely in emerging markets,” he said. “Consumer demand in U.S. and Western Europe was soft, but demand in emerging markets was better than expected. It was our best product mix in many years.”

Otellini said emerging markets account for well over 50 percent of Intel’s total business and that the growth of emerging markets is determined in part by the “dynamics of economics” as products become increasingly desirable and affordable for some two billion consumers.

NEXT: Intel’s Server Growth

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