Benefitting from its rapid shift to a new chip-making process and a big tax windfall, Intel Corp's first-quarter profit surged 19 per cent as lower production costs helped the company withstand another round in a fierce price battle with rival Advanced Micro Devices Inc.
Intel also raised its full-year profit margin guidance and said it would spend slightly more on research and development in 2007 than the company had previously forecast.
Meanwhile, AMD has slashed its revenue forecast and is expected to post a loss of 48 cents per share when it reports its own first-quarter results on Thursday.
Intel, the world's largest semiconductor company, said after the market closed yesterday that it earned $1.61 billion, or 27 cents per share, in the first three months of the year. That compares with net income of $1.36 billion, or 23 cents per share, in the same quarter last year.
The Santa Clara-based company said the latest profit includes a reversal of $300 million of previously accrued taxes that were added back into the company's coffers. It increased the earnings per share by about 5 cents.
The tax benefit stemmed from Intel's resolution of a dispute with the Internal Revenue Service over its method of accounting for certain export sales. The IRS had wanted to hit Intel with more than $2 billion in charges for back taxes from 1999 to 2005, but the two sides resolved the matter for an undisclosed sum.
Intel said revenue in the quarter was $8.85 billion, down slightly from last year's $8.94 billion. Analysts surveyed by Thomson Financial were expecting the company to earn, on average, 22 cents per share on nearly $9 billion in revenue.