Intel Corporation easily topped earnings estimates when it announced Tuesday that it had made $2.73 for the most recent quarter, on sales of over $8 billion, a rise of 13% over the previous year. Excluding one-time acquisition costs, the company made $3.1 billion. Shares of Intel closed up 6, at 129.
"Demand in the first quarter was stronger than we expected at the beginning of the year and continues to be stronger as we enter the second quarter," said Intel president and CEO Craig Barrett. "We also expect a strong second half, and are accelerating our investments in capacity to meet future demand. While supply remains tight entering the second quarter, we are ramping our 0.18-micron manufacturing technology rapidly in five facilities and expanding to eight facilities by year-end, which will substantially increase supply in the coming quarters. We are excited about our product introductions slated for the second half, when we will refresh our entire microprocessor line -- including the launches of the \[64-bit\] Itanium processor and processors code-named Willamette and Timna."
Intel has been experiencing record levels of demand for its microprocessors and, as a result, supplies of some products have been impossible to find. Also to blame is a rapid release cycle, necessitated by competition from AMD, whose Athlon CPU runs neck-to-neck with the Pentium III. Intel's higher end chips have lower yields, meaning that fewer workable chips can be made from the same amount of materials. As Intel ramps more of its facilities up to the 0.18-micron process required by the high-end chips, the supply problem should subside