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Intel profits up 18 percent
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July 16, 1996: 3:59 a.m. ET
Chip maker surprises Wall Street with better-than-expected results
From Correspondent Sean Callebs
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NEW YORK (CNNfn) - After hearing bad news from Motorola Inc. and Hewlett-Packard Co., Wall Street Tuesday anxiously awaited a fresh earnings report from Intel Corp.
Intel gave investors what they were hoping for.
The company said the earnings for its second quarter were $1.17 a share, 8 cents higher than Wall Street estimates and 18 cents above last year's levels. Intel posted net income of $1.04 billion, compared with $879 million a year ago.
Revenues for the quarter rose 18.7 percent to $4.62 billion.
The computer-chip maker was the most active issue on the Nasdaq stock market Tuesday with about 25 million shares changing hands before closing at $70. Shares climbed $2 during after-hours trading.
Although the news bodes well for Intel, analysts are also hoping it will have a positive effect on the battered, tech-heavy Nasdaq.
At one point, Intel had lost 5-3/16 after a false rumor surfaced that the company intended to delay the earnings report.
Analysts attribute the better-than-expected results to fairly consistent demand combined with the company's dominance in the semiconductor sector.
"They are uniquely positioned in the best end market right now. The PC market continues to be pretty healthy in terms of end demand, and Intel supplies the most important semiconductor in the market," said Rajiv Chaudry, technology analyst at Goldman Sachs.
Intel is important to the technology sector because the company controls 85 percent of the market for microprocessors and 50 percent of the motherboard market.
And perhaps more importantly, Intel's dominance allows it to handle the inventory needs for the entire computer industry.
The company recently announced it will cut prices on some of its processors in August, and many of the prices will drop even more than expected.
James Poyrner, technology analyst at Oppenheimer, said Intel is making the price cuts with the holiday season in mind. (60K WAV) or (60K AIFF)
Intel's quarterly earnings were more than $1 billion for the first time ever. Company officials say it's a sign that personal computer sales are healthy. 
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