No ‘Major’ Quake Damage to Intel’s Japan Offices, CEO Says

Though Intel sustained “some damage” to its Japanese sales and marketing offices in the March 11 quake, it was “nothing major that would hinder our ability to service our customers,” CEO Paul Otellini said on an earnings call as Intel reported improved profit and sales for Q1 ended April 2. Post-quake, Intel saw no “unusual changes or fluctuations to our backlog” of products, nor does it expect “any major disruptions to our supply lines moving forward,” Otellini said. All Intel employees and their families are safe, he said.

Consumer demand in the U.S. and Western Europe was “soft” in Q1, Otellini said. But he said that was expected, and sales in emerging markets and demand for enterprise servers and clients were “better than expected.” Compared to Q1 last year, “which was a very good quarter for us, we achieved double-digit growth across every major product segment, and across every region in the world,” he said.

Q1 profit grew to $3.16 billion, or 56 cents a share, from $2.44 billion, 43 cents, in Q1 last year. Revenue jumped to $12.85 billion from $10.3 billion. NAND flash sales were up 17 percent, while sales in its new Digital Home Group soared 129 percent from last year, Otellini said. That division is now “shipping at a rate of over 10,000 units per day into set-top boxes and smart TVs,” he said. Intel’s PC Client business “remains strong and grew 17 percent from last year” amid an “explosion of computing devices that connect to the Internet,” he said.

Inventory levels in the PC supply chain “remained healthy and well within normal operating ranges as we enter Q2,” Otellini said. The company expects to report revenue of $12.8 billion for Q2, “plus or minus $500 million,” it said. Intel reported Q2 revenue of $10.8 billion in Q2 last year. It gave no revenue estimate for this fiscal year.

"Over the course of this year, Intel will have tablet platforms that run Windows, Android” and the open-source MeeGo, Otellini said. “We remain committed to success in the smartphone segment, and we're actively working with a large number of handset manufacturers and carriers around the world,” he said. The company is “investing and developing new products for phones and tablets,” he said. “All of our major product segments are growing, and these new segments are expected to add to that growth momentum,” he said.

Intel is also “on track” to begin production on its 22-nanometer silicon process technology by the end of this year, Otellini said. That technology “will further distance Intel from the competition across all segments of computing,” he said.

The company’s estimates for PC segment growth in 2011 “remain in the low double-digit range based on early sellthrough strength we are seeing as we begin 2011 and the great reception to” its new Sandy Bridge processors in the consumer and enterprise segments, Otellini said. It was “too early to call 2012 with an improving global economy,” but he said the company saw “no reason for growth to be materially different from what we see in 2011.”