Intel Execs: Inventory Strained; Worldwide Markets Stable - InformationWeek
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4/20/2005
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Intel Execs: Inventory Strained; Worldwide Markets Stable

Intel, which saw a strong first quarter financial performance fueled by a drive to its range of mobile products, also is seeing tight supply of some components as it heads to the mid-year point of 2005.

Intel, which saw a strong first quarter financial performance fueled by a drive to its range of mobile products, also is seeing tight supply of some components as it heads to the mid-year point of 2005.

Executives at the Santa Clara, Calif.-based chipmaker told financial analysts during a conference call that there was a tighter supply than they preferred in chipsets and mobile processors "- although not enough to dampen the company's revenue and earnings.

Earlier, Intel posted first quarter revenue of $9.4 billion and earnings of 34 cents per share. Both numbers beat Wall Street estimates.

Intel Chief Financial Office Andy Bryant said the company seemed to have avoided a tough quarter unlike other technology companies, including IBM and its chip rival, Advanced Micro Devices. "As of today, worldwide demand seems pretty solid," he said.

However, Bryant also noted that the company has been struggling to keep up inventories of components that Intel has integrated very tightly into its overall strategy of creating platforms, rather than just selling processors. "Inventories are lower than we would like," he said.

Executives said Intel would increase capital spending for the rest of the year "- compared to what it had originally planned to spend "- in part as a response to lagging component stockpiles.

Intel's financial performance stood in contrast to Sunnyvale, Calif.-based AMD's. While AMD said its processor sales for the quarter hit a record number, the company missed earnings expectations "- and lost money -" saying its flash memory business was hit hard by pricing pressure. Bryant said Intel's flash memory revenue registered a 39 percent, year-over-year increase compared to the same quarter in 2004.

Intel and AMD have been battling it out since last year in both the market for 64-bit capable processors and in getting to market with dual-core processors. In response to a question from one analyst during the teleconference seeking a comparison between the two companies, Paul Otellini, Intel's president and chief operating officer, voiced confidence.

"The numbers speak for themselves in terms of the market difference between the two companies," Otellini said.

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