Intel generated $2.4 billion in profits on $10.3 billion in revenues in a record first quarter that not only saw strong consumer demand for laptops grow, but also showed signs of businesses beginning to reinvest in their IT infrastructure. The earnings capped off a quarter that saw Intel refresh most of its processor product lines.
Intel's financial numbers soared in a first quarter that saw the chip maker
aggressively roll out products and corporate spending begin to pick up.
Intel, which owns an 80 percent share of the worldwide
microprocessor market, generated $10.3 billion in the first three months of
2010, a 44 percent jump over the same period last year, when the global
recession was in full swing, company officials reported April 13. Profits came
in at $2.4 billion, a whopping 288 percent over the first quarter in 2009.
In a conference call with analysts and reporters after the
numbers were released, Intel CEO Paul
Otellini said the change over a year was significant. The first three months of
2009 saw the economy hitting its depths, Otellini said. Now, he said, "the
industry is nearly fully recovered."
Otellini said the consumer space continued to drive the
industry's recovery, noting the high demand for mobile devices, such as
laptops, and higher-end PCs.
In addition, the long dormant commercial space seems to be
showing signs of life, he said.
"We're also seeing signs of corporate spending improving,"
The first quarter saw a host of new processing platforms come
into both the PC and server markets from not only Intel, but also Advanced
For Intel, it started at the Consumer Electronics Show in
January, with the rollout of more of its 32-nanometer
Core i3, i5 and i7 chips
. During the quarter, Intel also launched its
9300 "Tukwila" processor
for high-end servers.
That was followed by the release of the 32-nm six-core Xeon
5600 "Westmere EP" chips and, in the last week days of the quarter, the
high-end Xeon 7500 "Nehalem EX" family, designed to drive
the x86 platform up
into the space traditionally occupied by RISC, Itanium
and mainframe systems.
Otellini and Intel CFO Stacy Smith said demand for Intel's
32-nm processors is spiraling upward. That demand, coupled with the high yields
from the first of Intel's 32-nm manufacturing facilities, persuaded company
executives to speed up the timetable for bringing two other 32-nm fabs online.
Otellini said that Intel now intends to have all four 32-nm
facilities operational by early in the fourth quarter. Intel officials
announced last year that they were investing $7 billion on the 32-nm processor
With a full quarter coming up for sales of the new processors,
Otellini expects to see demand for the products continue to grow. In addition,
like most other IT vendors, Intel has been waiting for corporate spending to
improve, something he said he is beginning to see.
On the client side, he said the average age of a laptop is four
years, and five years for a desktop. It's increasingly costly to keep these
systems up and running.
"You're getting to the point where, as CEOs start feeling
better [about the economy], it makes sense to swap [the older systems] out," he
Businesses also are expected to qualify Microsoft's Windows 7
operating system for use in their corporate environments as the year progresses.
Mobility will continue to be a big driver, Otellini said. Intel
is planning to release a dual-core version of its Atom processors in the second
quarter, and also is working on a low-power chip, he said.
In the server space, OEMs will continue to roll out systems
powered by both the Xeon 5600 and four- to eight-core Xeon 7500 processors,
which will feed into the pent-up demand to refresh aging fleets of servers.
The result should be increasingly strong quarters as the year
rolls on, Otellini said.
For the second quarter, Intel is predicting revenues of between
$9.8 billion and $10.6 billion.