If chip maker Intel
were an economic barometer for the various economies of the world--and
particularly the skittish economy of the United States--no one would be
talking about a recession, but rather a slight slowdown that had
occurred in the past and a situation that is clearly on the mend.
Unfortunately for those of us in the developed economies of the world,
Intel is not much of a barometer of the economies at large, even if it
is a big player in many economies. And hopefully, rival Advanced Micro Devices, which is struggling to right itself, isn't either.
Intel
finished its second quarter on June 28, and raked in $9.47 billion in
sales, up 10.9 percent over the second quarter in 2007. Net income rose
by 25.3 percent to $1.6 billion, and earnings per share came to 28
cents, up 27.3 percent from the year ago period. The company ended the
quarter with $4.08 billion in cash (down more than $3.2 billion from
the end of 2007) and $4.3 billion in short-term investments (down from
$5.5 billion six months ago). Intel spent the dough on stock
repurchases to boost per-share earnings comparisons and on capital
investments.
Intel's
flagship Digital Enterprise Group, which makes chips, chipsets, and
motherboards for PCs and servers, accounted for $5.37 billion in sales,
up 7.6 percent, with microprocessor sales accounting for $4.11 billion
(up 9.8 percent) and chipsets and motherboards accounting for $1.26
billion (up only 9/10ths of a percent). The Digital Enterprise Group
had an operating income of $1.71 billion, and it should be noted that
this quarter, Intel folded its Digital Home Group into the Digital
Enterprise Group and recast all of the numbers back through 2006.
Intel's Mobility Group had just under $3.8 billion in sales, up 14.8
percent, with microprocessors bringing in $2.74 billion (up 12.3
percent) and chipsets and other components bringing in $1.05 billion
(up 21.8 percent). Intel sold $300 million in other stuff in the
quarter. The company said that mobile chip and chipset shipments set
new records for the firm in Q2 2008, and that total microprocessor
shipments were up sequentially from Q1 2008 and higher than seasonally
expected.
By geographic
region, Intel sold $4.8 billion in products in the Asia/Pacific region,
up 7.8 percent, with the Americas region accounting for just under $2
billion (up 8.9 percent), Europe buying $1.74 billion (up 17.2
percent), and Japan at $939 million (up 2.6 percent).
Looking
ahead to the third quarter, Intel said that it expected sales to be
between $10 billion and $10.6 billion; the company had $10.1 billion in
sales in the third quarter of 2007 and brought $1.9 billion to the
bottom line. So Intel expects to do about the same on the revenue
front, and as usual, it does not talk about potential earnings for a
future quarter and leaves that to the Wall Street mathematicians. Paul
Otellini, the hero of the Intel turnaround and the company's chief
executive officer, said in a conference call with Wall Street analysts
that demand for its products in the second half of the year were
expected to be strong across product segments and geographies. Still,
the news on Monday that the antitrust regulators in the European Union
would be levying new antitrust charges against Intel in its ongoing
antitrust lawsuit with AMD put a bit of a buzzkill on the financial
results, which were clearly good.
The
news that the EU was looking more closely into allegations that Intel
has been using monopoly power to thwart the advances of AMD in the X86
and X64 processor markets didn't really help AMD's top brass all that
much. In fact, in the wake of its second quarter financial results,
Hector Ruiz, now AMD's executive chairman, lost the chief executive
post, which was passed on to Dirk Meyer, who came to AMD in 1995 after
designing DEC's line of 64-bit Alpha processors. Meyer has been
president and chief operating officer at AMD for the past two years and
was the most probably successor to Ruiz for the CEO post. And if AMD
doesn't shape up its financial situation, maybe for the chairman post,
too.
AMD's sales in the
second quarter ended June 28 came to $1.35 billion, up 3.1 percent. The
company had an operating loss of $143 million and a net loss of $1.19
billion, which was a lot worse than the $600,000 loss it had in Q2 2007
against essentially the same revenues. Most of that loss--$920 million
of that--was for discontinued flash memory and other minor businesses,
so in the core microprocessor business, AMD's financials have actually
improved a little at the bottom line, with a loss of $269 million
versus a loss of $531 million a year ago. By segment, Computing
Solutions segment accounted for $1.1 billion in sales, up a smidgen
from last year's Q2, while the Graphics segment contributed $248
million to the quarter, up 17.5 percent.
"While
we had a disappointing quarter financially, customer adoption of our
recently introduced microprocessor and graphics products and platform
offerings is strong, and we see increasing momentum across our
businesses," explained Robert Rivet, AMD's chief financial officer, in
a statement accompanying the financial results. "In the face of
challenging macroeconomic conditions, we remain committed to achieving
operating profitability in the second half of the year based on the
continued ramp of new products, increased market penetration of our
differentiated solutions, and continued actions designed to reduce our
breakeven point."
There was some chatter earlier this year about IBM
possibly buying AMD, and at its current $2.8 billion market
capitalization, Big Blue can actually afford to do it. And quite
possibly shut down AMD's chip fabs and move production to its
top-of-the-line plants in Upstate New York. A year ago, AMD's value was
nearly four times higher, and it was far too expensive for anyone to
acquire--at least considering that it is in the risky X64 processor
business and going up against juggernaut Intel, anyway.
From : http://www.itjungle.com/
