Intel has announced a further fall in profits but said its microprocessor manufacturing business, which includes its Leixlip, Co Kildare, facility, performed better than expected.
The California-based chip maker unveiled profits of $854 million (#1 billion) for the three months to the end of June. The figure represented a fall of 76 per cent on the same quarter last year and 22 per cent on the first quarter of this year.
When the cost of acquisitions made during the period were taken into account profits fell $196 million, said the company. This reflected the amortisation of $594 million in goodwill. During the quarter, Intel completed the acquisition of VxTel, and completed the acquisitions of Cognet and LightLogic.
Last year's second quarter results included a gain on investments of $2.1 billion, primarily from the sale of assets in the Intel Capital portfolio, which compares to a $3 million gain in the second quarter of 2001.
Sales were $6.3 billion during the quarter, down 24 per cent on the second quarter of 2000 and 5 per cent on the first quarter of this year.
"Intel's second quarter results met our overall expectations as our microprocessor business performed better than expected, with sequential growth in units, while our communications and flash businesses remained soft," said Mr Craig R. Barrett, president and chief executive.
There was no mention in last night's result statement of the possibility that the company might close some of its manufacturing facilities temporarily in response to flagging demand.
The US group confirmed this month it was considering a temporary closure for its Leixlip plant, which employs 4,000 people. A spokesman said it was one of several options the company was looking at in response to the continued global slump in the demand for chips.
Construction of a $2 billion extension to the Leixlip plant was halted last March and Intel has already offered its staff the opportunity to take two weeks additional unpaid leave.
It also said yesterday it had accelerated its microprocessor product line to provide a more rapid transition from the Pentium III processor to the Pentium4 processor and stimulate demand.
The firm warned margins would decline further to 47 per cent from 48 per cent and that margins for the year would be about 49 per cent compared to 50 per cent.
Capital spending for 2001 is expected to be about $7.5 billion, but it was unclear last night if this included the postponed extension to the Dublin facility.
Intel's chief financial officer Andy Bryant said last night he would like to have had better results but the company was looking for a seasonal second half improvement in the microprocessing business.
The results could have been a lot worse were it not for the company's microprocessor shipments, which came in higher than Intel had expected.
"We actually saw microprocessors' unit shipments grow by about 6 per cent sequentially," in the second quarter and this figure was quite a bit higher than seasonal norms, he said. "This gives us confidence that the stronger seasonal second half that we typically experience will happen."
