Laptop sales boost profit at Intel

Intel has reported another bumper quarterly profit, underpinned by strong demand for laptops and other portable computing devices.

The chipmaker, which faces a new round of antitrust investigations in Europe, achieved second-quarter net profit of $1.60 billion (800 million) from $1.28 billion (640 million) a year ago. Turnover rose to $9.47 billion (4.73 billion) from $8.68 billion (4.34 billion), whereas analysts had expected $9.32 billion (4.66 billion) on average.

But its second-quarter gross margin disappointed some analysts as higher demand for cheaper laptops led to a lower-than-expected average microprocessor selling price.

"The concern on the Street was that demand may be falling off the cliff. We've seen that in the handset market. So at least as Intel's results and outlook goes, we're not seeing similar weakness in the PC market," said CRT Capital Group analyst Ashok Kumar.

"The only mild disappointment was in the gross margin line due to a higher mix of low-end notebooks, but overall I think the result was a surprise on the positive side, given the macro environment," Kumar said.

So far this year, Intel shares have fallen 22 per cent, compared with a 15 per cent decline in the Philadelphia Semiconductor Index.

"Demand for our leading-edge computing products around the world continues to be strong, with revenue and unit shipments towards the high end of the seasonal norm," said Intel chief executive Paul Otellini on a conference call with analysts.

Intel's gross margin - percentage of revenue after subtracting product costs - was 55.4 per cent in the quarter.

That was up from 53.8 per cent the previous quarter but slightly below the midpoint of Intel's own forecast range.

"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."

Intel has been benefiting from brisk sales of laptops, 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 demand signals we're seeing are pretty strong," chief financial officer Stacy Smith said in a phone interview, when asked about demand in the latter part of 2008.

He said inventory levels were "pretty normal" and shipments of mobile processors in the second quarter had topped 50 per cent of all PC processors shipped for the first time. "It's a pretty important milestone," Smith said.