Intel profit rises, driven by notebook PC sales

By Duncan Martell

SAN FRANCISCO (Reuters) - Intel Corp (INTC.O) said on Tuesday quarterly net income rose 25 percent, helped by strong sales of microprocessors used in notebook computers, and gave a revenue forecast that topped expectations.

The world's biggest chipmaker also reported an improved gross margin for the second quarter, but it was slightly below the midpoint of its own forecast range due to price pressures.

For the current quarter, Intel said it expects revenue of $10.0 billion to $10.6 billion, compared with the average analyst forecast of $10.0 billion, according to Reuters Estimates.

Intel has been benefiting from brisk sales of notebook PCs, 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.

Shares of Intel ticked higher following the results, after gaining 1.2 percent in regular Nasdaq trading.

"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."

Second-quarter net income rose to $1.60 billion, or 28 cents per share, from $1.28 billion, or 22 cents per share, a year ago. That beat the average Wall Street estimate for a profit of 26 cents per share, according to Reuters Estimates.

Revenue rose to $9.47 billion from $8.68 billion, whereas analysts had expected $9.32 billion on average.

"As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe," Chief Executive Paul Otellini said in a statement.

Intel's gross margin -- percentage of revenue remaining after subtracting product costs -- was 55.4 percent in the second quarter.

That was up from 53.8 percent the previous quarter but slightly below the midpoint of Intel's own forecast range as higher demand for lower-priced notebook PCs led to a lower-than-expected average microprocessor selling price.

For the third quarter, the Santa Clara, California-based company forecast a gross margin of 58 percent, plus or minus a couple of points, it said in a statement.

Intel said sales of mobile microprocessors and chipset units both set records in the second quarter. Total microprocessor shipments rose from the first quarter and were higher than normal seasonal trends.

Shares of Intel rose to $20.83 in extended trade from their Nasdaq close of $20.71. So far this year, the stock has fallen 22 percent, compared with a 15 percent decline in the Philadelphia Semiconductor Index .SOXX.

(Additional reporting by Robert MacMillan in New York; Editing by Braden Reddall)