Intel on Tuesday reported second-quarter net income that was down 76 per cent from a year ago, as the company continues to grapple with slowing PC sales and pricing pressure in the market for PC microprocessors.
Net income for the quarter, which ended June 30, was $854 million, down from $3.5 billion a year ago. That translated into earnings of $0.12 per share, down from $0.50 in the second quarter of 2000. Analysts polled by Thomson Financial/First Call had expected the company to report earnings of $0.10 per share.
Revenue was $6.3 billion, down 24 per cent from the year-earlier quarter, Intel said in a statement.
The income figures exclude acquisition-related costs. Including those charges, net income was $196 million, down 94 per cent from a year ago. Earnings per share were $0.03, down from $0.45 in the second quarter of 2000.
"Intel's second quarter results met our overall expectations as our microprocessor business performed better than expected, with sequential growth in units, while our communications and flash businesses remained soft," Craig Barrett, Intel's president and chief executive officer, said in a prepared statement.
"We are confident that (the) Intel architecture has returned to seasonal patterns and expect a strong second half," Andy Bryant, Intel's executive vice president and chief financial officer, said in a conference call with reporters and analysts.
However, results for the third quarter may be tempered by lower average selling prices for microprocessors and ongoing weakness in its other chip businesses, Bryant said. The company expects third quarter revenue to be between $6.2 billion and $6.8 billion, he said, which would be in line with analysts' current predictions.
Intel will update its prices and its roadmap next month in order to complete its transition from the Pentium III to the Pentium 4 by year's end, Paul Otellini, executive vice president and general manager of the Intel Architecture Group, said during the call. Asked what that might mean for prices, Otellini said the company "will do what we need to do" to complete the transition.
The company is on track to launch a 2GHz version of the Pentium 4 later this quarter, while its Celeron chip for low cost PCs should reach speeds exceeding 1GHz in the second half of the year, Otellini said. "We firmly believe that this will put us in a position to gain market share throughout the second half and beyond," he said.
Intel's Pentium 4 processor should be available in PCs priced from as low as £600 by the end of the year, he said.
During a mid-quarter financial update last month, Intel said it expected revenue for the second quarter to be slightly below the midpoint of the $6.2 billion to $6.7 billion range that it estimated at the close of its first quarter. The chip maker also said that expenses would be slightly below the midpoint of its forecast, which was between $2.2 billion and $2.3 billion.
Intel's main rival, Advanced Micro Devices, last week also reported a sharp drop in profits for its second quarter. Earnings per share came in at $0.05, down from $0.61 per share in the year earlier.