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Intel Posts Higher Profit, Boosts Sales Outlook

Intelsaid on Tuesday quarterly net income rose 25 percent, helped by strong sales of microprocessors used in notebook computers, and gave a revenue forecast that topped expectations.

Exterior view of Intel headquarters in Santa Clara, California.
Paul Sakuma
Exterior view of Intel headquarters in Santa Clara, California.

The world's biggest chipmaker also reported an improved gross margin for the second quarter, but it was slightly below the midpoint of its own forecast range due to price pressures.

For the current quarter, Intel said it expects revenue of $10.0 billion to $10.6 billion, compared with the average analyst forecast of $10.0 billion, according to Reuters Estimates.

Intel has been benefiting from brisk sales of notebook PCs, which are on track to outpace sales of desktop PCs this year.

On Monday, Intel rolled out the latest generation of its Centrino wireless chip after a delay of several months.

Shares of Intel ticked higher following the results, after gaining 1.2 percent in regular Nasdaq trading.

"I like the revenue outlook and the gross margin outlook," said Doug Freedman, an analyst with American Technology Research. "The only slight negative is the spending level on marketing and general administration is slightly higher."

Second-quarter net income rose to $1.60 billion, or 28 cents per share, from $1.28 billion, or 22 cents per share, a year ago. That beat the average Wall Street estimate for a profit of 26 cents per share, according to Reuters Estimates.

Revenue rose to $9.47 billion from $8.68 billion, whereas analysts had expected $9.32 billion on average.

"As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe," Chief Executive Paul Otellini said in a statement.

Second-quarter net income rose to $1.60 billion, or 28 cents a share, from $1.28 billion, or 22 cents a share, a year ago. (See the accompanying CNBC video for more on Intel earnings.)

Revenue rose to $9.47 billion from $8.68 billion. Analysts had expected $9.32 billion on average, according to Reuters Estimates.

Intel has been benefiting from brisk sales of notebook PCs, which are on track to outpace sales of desktop PCs this year.

On Monday, Intel rolled out the latest generation of its Centrino wireless chip after a delay of several months.

The Santa Clara, California -based company had a gross margin—percentage of revenue remaining after subtracting product costs—of 55.4 percent in the second quarter, up from 53.8 percent the previous quarter.

That was up from 53.8 percent the previous quarter but slightly below the midpoint of Intel's own forecast range as higher demand for lower-priced notebook PCs led to a lower-than-expected average microprocessor selling price.

For the current, third quarter, Intel forecast a gross margin of 58 percent, plus or minus a couple of points, it said in a statement.

Intel also said sales of mobile microprocessors and chipset units both set records in the quarter. Total microprocessor shipments rose from the first quarter and were higher than normal seasonal trends.

Shares of Intel were up a little less than 1 percent in extended trading after rising 1.17 percent to finish regular market hours at $20.71.

Second Half Demand 'Pretty Strong'

'Pretty Strong' Demand in Second Half

Intel is seeing healthy demand for its products going into the back half of 2008, the company's chief financial officer said on Tuesday.

"The demand signals we're seeing are pretty strong," said Chief Financial Officer Stacy Smith in a telephone interview when asked about demand in the latter part of this year.

He said the company's second-quarter results were at the high end of its typical seasonal range.

"We forecasted a seasonal third quarter and I think that kind of says it all," Smith said, noting that inventory levels in the just-reported quarter were "pretty normal."

He also said that shipments of mobile processors in the quarter for the first time topped 50 percent of all PC processors shipped in the quarter. "It's a pretty important milestone," Smith said.

- CNBC.com staff contributed to this report.