Intel profit dips as PC and server chip sales decline

Intel sales in the key PC and server division have either fallen or are flat, though revenues beat forecasts

Intel has reported its first-quarter earning results for fiscal 2012, with profit dropping on a slowdown in PC and server chip sales.

Intel's net profit was $US2.7 billion for the first quarter ending on March 31, a drop from the net profit of $US3.16 billion during the same quarter in the previous fiscal year. Excluding one-time items, however, Intel earned $US2.9 billion and basic earnings per share were $0.56, while analysts polled by Thomson Reuters forecast EPS of $US0.50.

Intel's revenue was $US12.9 billion, which was flat compared to the $US12.85 billion revenue of a year ago. Revenue for the PC client group, which sells PC, tablet and smartphone microprocessors, fell to $US8.45 billion from $8.62 billion. Revenue for the Data Center Group, which sells server equipment, was $US2.45 billion, flat compared to the $US2.46 billion a year ago.

The software revenue, however, grew to $US571 million, compared to $US240 million a year ago.

The first quarter of 2012 was a thirteen-week quarter, while the first quarter of 2011 was a 14-week quarter, an Intel spokesman noted.

The first quarter was a "solid start" to what will be a growth year for Intel, said CEO Paul Otellini in a statement. The first Intel Inside smartphones will ship later this quarter, which should trigger the first volume shipments of Atom chips for smartphones.

Atom has been a weak spot for Intel ever since the netbook market declined with the emergence of tablets. Intel has virtually no presence in the tablet market, which is dominated by ARM.

Intel this quarter also expects to ship Ivy Bridge processors made using the 22-nanometer process for PCs. The first Ivy Bridge chips are expected to be announced later this month and PC announcements will soon follow.

The company also launched the Xeon E5-2600 chips in early March, which the company hopes will boost revenue during the second quarter.

For the second quarter of 2012, Intel is expecting revenue to be around $US13.6 billion, plus or minus $US500 million.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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