Intel, the world's largest maker of semiconductors, which employs 4,000 people in Leixlip, Co. Kildare, has reported strong growth in second-quarter earnings, with the figures coming in just below analysts' expectations. The group has said it expects a strong second half of the year and has said it is optimistic about the outlook for its Pentium III processor, which is central to the outlook for the Leixlip plant.
Intel reported second-quarter net income (after-tax profits) of $1.7 billion, or 51 cents a share, compared with net income of $1.2 billion, or 33 cents a share, a year ago. The consensus among analysts was for 53 cents a share.
Second-quarter revenues (sales) were $6.7 billion, down 5 per cent from the first quarter, but up 14 per cent from the $5.9 billion recorded in last year's second quarter. The company had forecast in April that its second-quarter revenues would be flat to down slightly from first-quarter revenues.
"As expected, second-quarter revenue reflected a seasonal slowdown and we look forward to a strong second half," Intel president and chief executive officer Mr Craig Barrett said in a statement.
The Santa Clara, California-based company said it expected third-quarter revenues to be up slightly from the second-quarter levels.
Gross margins are also expected to be up slightly from 59 per cent of revenues in the second quarter. Intel said that its gross margin expectation for the full year is now 60 per cent, plus or minus a few points, which is higher than previously expected, due to the positive impact of cost-cutting and manufacturing efficiency. Previously, it had forecast a gross margin of around 57 per cent.
Intel employs over 4,000 people at its Irish production facility in Lexilip. It recently announced that it was phasing out a test and assembly operation for one of its older processors at the site, but said that all the 750 employees in this area would be offered the option of transferring to production of the Pentium III product. The older processor, used in servers, will now be assembled elsewhere, but Intel says it will require 1,000 new employees as it increases production of Pentium III, used in desktop computers, multimedia applications and the like.
The company statement last night said that Pentium III would be its "fastest ramping processor ever", meaning that its production will be increased quickly to meet rising demand.
--(additional reporting by Reuters)
