Intels Second-Quarter Profit Doubles

Chip-making giant Intel Corp. said Tuesday its second-quarter profits doubled as demand for computer microprocessors was stronger than expected.

On a day when it marked its 35th anniversary, Intel Corp. celebrated quarterly earnings that showed a doubling of its income over the same period last year and an 8 percent jump in revenue.

The giant chip maker on Tuesday reported second-quarter net income of $896 million, compared with $446 million during the same time last year. During the same three months that ended June 28, Intel, of Santa Clara, Calif., generated revenue of more than $6.8 billion, an increase over the $6.3 million during the second quarter last year.

Intel officials, while admitting that last years second-quarter results were impacted by more than $218 million in charge and write-offs for such items as shutting down its online services business, attributed much of the current success to increasing demand for its computer chips. The company added to that lineup right after the quarter ended, when it rolled out the new 64-bit Itanium 2 6M chip—formerly code-named Madison—and the new Gallatin Xeon chip, both released June 30. They also pointed to the growing acceptance of the companys Centrino mobile platform, particularly as the company gears up to market the technology to consumers. They expect the Madison chip to fuel interest in Itanium, which has suffered with disappointing sales.

Among the second-quarter rollouts were a 3.2GHz Pentium 4 chip that included Intels Hyper-Threading technology, designed to increase application performance by enabling a single chip to work as two virtual chips. Intel also launched new versions of its Centrino processor and new mobile Pentium 4 chips, Celeron processors and chip sets.

Looking at the current quarter, Intel officials said they expect third-quarter revenue to come in between $6.9 billion and $7.5 billion. In addition, Intel will increase its research and development spending from $4 billion to $4.2 billion, as Intel ramps its .09-micron manufacturing process and develops its .065-micron process, Chief Financial Officer Andy Bryant said during a conference call with analysts and reporters.

Bryant said that while Intel officials were not predicting a recovery, they were seeing encouraging signs, something that fueled their decision to complete an in-house program of giving every employee a computer to use at home.

"Were not seeing signs of economic recovery," Bryant said, adding that revenues are "returning to more seasonal pattern, but not any breakout. If we saw an upgrade cycle, if we saw IT budgets going up, then wed be more optimistic."