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April 15, 1997updated 05 Sep 2016 12:13pm


By CBR Staff Writer

Intel Corp thrashed Wall Street expectations and defied the skepticism that caused its shares to fall 11% last week by reporting excellent first-quarter numbers, but hinted that the trend might not continue forever. Intel reported net income which soared 121.8% to $1.98bn dollars, the second straight quarter it has doubled its profits from the previous year. Earnings per share climbed 116% to $2.20, far above analysts’ projections of $2.07. Revenue rose 39% to $6.4bn on strong sales of the Pentium processor with MMX technology – introduced in the quarter – and the Pentium Pro. Gross margin for the quarter was a remarkable 64%. But the company says it expects this figure to be flat to slightly down for the second quarter, as a result of increased expenses – up 7% to 9% from Q1’s $1.3bn – and revenues which it sees as flat to slightly up from the first quarter. A problem for the second quarter will be the challenge of adding manufacturing capability fast enough to cope with demand for the Pentium II processor, to be introduced in May. Income from interest and other sources is also expected to drop by about 18% to $170m. For now, Wall Street warmed to the current good news, with Intel shares rising $1.25 after the bell on Monday to $135, after closing the day up $3.25 at $133.75. Intel shares had fallen steadily last week due to uncertainty about the quarterly report and speculation that planned price cuts of 25% to 30% in the face of competition from other chipmakers would hurt profitability.

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