Intel's Q1 boosted by enterprise strength, new products

Intel reported growth in revenue and income for the first quarter of 2011, driven by the addition of new products and strength in the enterprise market.

The company reported net income of $3.2 billion on a GAAP (generally accepted accounting principles) basis for the quarter ended on April 2, up 29% compared to the same quarter a year ago. The company reported earnings per share of $0.56.

Intel reported revenue of $12.8 billion for the first quarter, growing by 25% compared to the year-ago quarter. Analysts polled by Thomson Reuters estimated revenue to be $11.6 billion.

Intel earlier this year completed the acquisitions of security company McAfee and Infineon's wireless division, which contributed around $500 million to the first-quarter revenue, said Stacy Smith, Intel's chief financial officer, in a statement. The company announced new Sandy Bridge processors and also fixed the Cougar Point chipset design issue associated with new processors without any revenue impact.

The chip maker on Jan. 31 had said it expected the chipset design error to reduce revenue by approximately $300 million during the first quarter.

Revenue for the Intel Architecture Group during the quarter was $12.2 billion, which was up 23% year over year. Revenue for the PC Client Group, which offers laptop and desktop chips, was $8.6 billion, up 17% year over year. Revenue for the Data Center Group, which offers products for servers, storage and workstations, was $2.5 billion, up 32% year over year.

The strong demand for data center products in the enterprise continued from the previous quarter, and the company's server business exceeded expectations, Smith said in the statement.

"We continue to benefit from demand strength in the enterprise and emerging market segments, despite softness in the consumer market segments of the U.S. and Western Europe," he said.

Intel in early April started shipping new Xeon E-series server chips based on the Sandy Bridge architecture, and there is a strong demand for single-socket server chips, Intel CEO Paul Otellini said during a conference call.

The company is bullish about the data center business and expects it to be a major driver of business for years to come, Otellini said.

Revenue also went up due to a rise in PC chip prices compared to the fiscal fourth quarter of 2010. The inventory of older chips started clearing up during the quarter, and adding new Sandy Bridge chips to the mix kept the price ceiling high, Smith said.

McAfee and Infineon Wireless contributed to Intel's Q1 revenue and profit growth

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