Intel Corp. reported a 93 percent increase in first quarter net income and a slight rise in sales compared to last year, but cautioned it has yet to see signs that the battered high-tech industry is on the road to recovery.
Craig Barrett, Intels chief executive officer, largely attributed the companys surge in profits to its success in lowering its manufacturing costs per chip, a reward reaped from the companys multibillion-dollar investments last year in new facilities and equipment.
"Intels aggressive R&D and manufacturing investments paid off in the first quarter, helping our product mix and profitability in a generally soft environment," Barrett said in a statement issued Tuesday.
For the first three months of the year, Intel reported net income of $936 million, or 14 cents a share, a dramatic increase over the $485 million, or 7 cents a share it earned during the same period last year.
But total sales edged up only 2 percent from a year ago, climbing from $6.78 billion to $6.68 billion in 2001.
Both earnings per share and total revenue were largely in line with projections of Wall Street analysts, according to Thomson Financial/First Call.
Looking ahead, Barrett said the company expected sales to remain sluggish through the second quarter as corporate spending remains tight more than a year after the high-tech industry was hard hit by a sudden and dramatic drop in demand. The CEOs comments appear to indicate that while the worst may be over, the long awaited recovery has yet to begin.
"While demand in emerging markets remains solid, established markets such as the United States and Europe continue to be impacted by weak IT spending," Barrett said.
Andy Bryant, Intels chief financial officer, was more blunt in a conference call with market analysts Monday saying, "We still havent seen any signs of a recovery."
For the second quarter, Intel is projecting revenues will be between $6.4 billion and $7 billion, but it expects gross profit margins – or profit per product sold – to increase slightly from the first quarter, which should help boost its bottom line.