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Intel announces decent if unspectacular Q2 results

The operative word for Intel these days is 'flat.' The chip giant on Tuesday reported small sequential gains in sales and profits for the second quarter of 2012, but the kind of sustained quarterly growth that marked the pre-recession heyday of the PC industry now seems a distant memory.

Intel reported second-quarter revenue of $13.5 billion (£8.5bn), up 5 per cent from the previous quarter, and net income of $2.8 billion (£1.8bn), up 3 per cent.

But quarterly profits were down by about $100 million (£64m) year-over-year, EPS was flat, and extending the numbers to the past six months paints an even more worrying picture — Intel had a better overall first half in 2011 than in 2012.

Intel president and chief executive Paul Otellini presented a conservative outlook on the company's third-quarter prospects, but said the maturation of the chip maker's ultrabook initiative and the pending release of Microsoft's next-gen Windows 8 operating system could help close out 2012 with a bang.

"The second quarter was highlighted by solid execution with continued strength in the data center and multiple product introductions in ultrabooks and smartphones. As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment," he said.

"With a rich mix of ultrabook and Intel-based tablet and phone introductions in the second half, combined with the long-term investments we're making in our product and manufacturing areas, we are well positioned for this year and beyond."

Intel's push for fast-booting, secure, thin-and-light notebooks has been credited by some industry watchers for revitalising the laptop market in the face of increasing pressure from mobile devices like smartphones and tablets, but reports of weaker than expected demand for ultrabook solid state drives (SSDs) suggest that the jury's still out.

Meanwhile, the highlight of the chip giant's own belated foray into the mobile space was the introduction of a real live x86-based smartphone earlier this year — a victory to be sure, but not the hard-charging challenge to the ARM architecture's dominance in mobile that Intel has been promising for some time.

Intel also released new PC chips code named Ivy Bridge and new server chips code named Romley during the second quarter.

Windows 8 is expected to be released in October and Otellini offered his take on how he believes the rollout of the new OS will happen in the fourth quarter and beyond.

"My sense is you'll see a very rapid adoption [of Windows 8) in consumer as usual and enterprise will adopt when the first service pack is released or when their fall buying cycles warrant," he said.

The Intel CEO also said the company's distribution channel had enjoyed its best second quarter in years thanks to a hard fought transition from its old whitebox assembly model to system integration and services attached to reselling brand name desktops, laptops, and servers.

"Intel had a pretty good quarter considering the macro challenges. Romley-based servers contributed to huge gains and even client revenue was up," said Pat Moorhead, principal analyst with Moor Insights & Strategies.

"The third quarter will be challenging but Intel has a lot going for them as they head into a seasonably huge fourth quarter with Windows 8, lower-priced and full-featured ultrabooks, and new and compelling convertibles and tablets," he added.