Intel Corp. (NASDAQ: INTC) has released its second quarter earnings report and the company posted record non-GAAP revenue of $13.1 billion. The chipmaking giant’s non-GAAP EPS came in at $0.59. Analysts had been expecting revenue of $12.82 billion and EPS of $0.51. The company appears to have risen above the weakening estimates on PC sales and chip shipments that have been making the rounds.
On a non-GAAP basis, gross margins fell sequentially from 67.5% to 62%, and margins fell on a GAAP basis from 67.6% to 61%, in line with previous estimates. The company also repurchased $2 billion worth of stock during the quarter.
The company attributed the record revenues to strong corporate demand for its high-powered processors, growth in demand for mobile devices, and growth in demand driven by a surge in Internet data centers. Revenue growth in the first half of 2011 reached 23%, and Intel anticipates that its annual revenues will grow in the mid-20% range.
The company’s PC group grew revenue 11% year-over-year and the Data Center group boosted revenue by 15%. Intel’s Other Architecture group, which includes its embedded and communications products, grew revenue by 84% year-over-year. That is primarily the result of Intel’s recent acquisitions of McAfee and Infineon, now Intel’s Mobile Communications group, which contributed $1 billion in revenue for their first full-quarter of operation.
The company provided new guidance for the third quarter and the full fiscal year. It now expects third quarter GAAP revenue of $14 billion, plus or minus $500 million, and non-GAAP revenue of $14.1 billion. Gross margins are expected to improve to 64% on a GAAP basis and 65% on a non-GAAP basis, plus or minus a couple of points.
For the full year, gross margins are expected to total 63% on a GAAP basis and 64% on a non-GAAP basis, plus or minus a couple of points. Marketing and administration (MG&A) for the year is expected to total $16.2 billion, up from a previous estimate of $15.7 billion. Full-year capital spending is now forecast for $10.5 billion, up from a previous estimate of $10.2 billion.
Sales in Asia, excluding Japan, accounted for half of the company’s revenue in the quarter, and it believes that it will see continued growth from emerging markets.
Intel finished the quarter with $11.5 billion in cash and equivalents, about even with first quarter cash but down from $17.8 billion in the same period a year ago.
If there is a weak spot in Intel’s report it is in sales of the company’s Atom microprocessors and chipsets. Revenue fell 15% year-over-year to $352 million.
Intel’s shares closed at $22.99 today, and have fallen about -0.5% to $22.88 in after-hours trading. After-hours trading of the Semiconductor HOLDRS ETF (NYSE: SMH) is also down -0.22%, to $32.91, after closing the regular session at $32.98.
Paul Ausick
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