Fewer Sales, Swelling Inventories Keep Intel Earnings Flat
Updated: Although the company failed to improve its earnings and revenue over the first quarter of 2004, an official said he doesn't think Intel will have to take an inventory write-off.Dragged down by lower microprocessor shipments and skyrocketing inventories, Intel on Tuesday reported flat revenue and earnings for the second quarter. Intel Corp., based in Santa Clara, Calif., reported a net income of $1.8 billion on revenue of $8.05 billion, slightly lower than the $8.1 billion in revenue that analysts expected. While the companys earnings and revenue failed to improve over the first quarter of 2004, Intels net income increased 96 percent year-over-year, and revenues increased by 18 percent. Intel reported $5.75 billion in microprocessor revenues, a slight drop from the $5.98 billion the company reported in the first quarter. Chip set and motherboard revenue also fell from $1.05 billion to $1.02 billion, although the company reported increased sales of chip sets, and motherboard sales reached a record high.
More troubling was a corresponding $427 million increase in inventories, roughly half of them from Intels new 90-nm "Prescott" chips. During the second quarter, Intels inventory levels reached an all-time high of $2.8 billion. The additional inventory bloat again added to Intels on-hand stocks, pushing the figure up to $3.2 billion.