Intel Sales Grow Behind Data Center, Embedded Chip Businesses

Intel reported second quarter revenue of $13.1 billion, up from $12.8 billion last year. The chip maker's net income grew $67 million or 2 percent year-over-year to reach $3 billion; excluding a one-time charge, income jumped $290 million or 10 percent year-over-year. Overall, it was Intel's fifth consecutive quarter of record revenue.

"We achieved a significant new milestone in the second quarter, surpassing $13.0 billion in revenue for the first time," Intel President and CEO Paul Otellini said. "Strong corporate demand for our most advanced technology, the surge of mobile devices and Internet traffic fueling data center growth, and the rapid rise of computing in emerging markets drove record results."

Intel's Data Center Group sales increased 15 percent year-over-year, with cloud computing and enterprise servers leading the way, while revenue for the company's Embedded & Communications Group jumped a whopping 25 percent. Intel's embedded division includes processors like the Xeon and Atom chips that power systems such as portal medical devices, networking equipment, storage systems and digital signage. Otellini said medical systems in particular helped push the group's "rapid growth."

Intel's PC Client Group saw an 11 percent increase in revenue. While PC demand in mature markets like the U.S. and Europe remained soft, Otellini said emerging markets such as Brazil continued to be a growth area for Intel. In fact, Otellini highlighted Brazil's "astounding" growth and said the country is poised to become the third largest PC market in the world by 2012.

Otellini also said Intel's worldwide channel revenue grew 17 percent due largely to growth in emerging markets, which he said rely more heavily on white box PCs and custom system builders.

The one area of concern for Intel was its netbook business; once a fast-growing money machine, netbook sales have continued to slump in recent quarter. Intel said its Atom revenue decreased 15 percent year-over-year. "Our mainstream notebook and desktop business are still looking at double digit growth," Otellini said. "We're still showing growth in netbooks -- it's just at a slower rate."

To counter the slumping netbook segment, Intel will push its new "ultrabook" category of thin but affordable notebooks. "Ultrabooks are the next evolution in personal computing," Otellini said.

Intel's two recent acquisitions, McAfee and Infineon Wireless Solutions, contributed $1 billion in revenue for their first full quarter of results. Otellini said McAfee's performance exceeded the company's expectations, adding that "The importance of security has never been more evident.

Intel said it expects revenue of $14 billion for the third quarter, "plus or minus $500 million," which would give the world's largest chip company a sixth consecutive quarter of record revenue.