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US chip giant Intel on Tuesday
reported strong first quarter profits on higher sales revenue, with earnings per
share up 13 cents, 30% year-over-year. Meanwhile, Goldman Sachs in a new report
says tablet computers such as the iPad, will cannibalize about 35% of the PC
market in 2011.
The firm said revenue was $12.9bn,
operating income was $4.3bn, net income was $3.3bn, and EPS (earnings per share)
was 59 cents.
The company generated approximately $4.0bn in cash
from operations, paid cash dividends of $994m, and used $4.0bn to repurchase
189m shares of common stock.
The first quarter “was a very
strong quarter and significantly better than we expected,” Stacy J. Smith,
Intel’s chief financial officer, said in an interview on Tuesday.
The company gained from sales of
chips used in server systems and other hardware for computer rooms, and revenue
increased 32% in that business.
However, Intel PC-related sales also increased, 17% for chips used in personal
computers, despite reports that tablets such as the Apple iPad are eating into
first-quarter revenue was an all-time
record for Intel fueled by double digit
annual revenue growth in every major
product segment and across all
geographies,” said Paul Otellini,
Intel president and CEO. “These
outstanding results, combined with our
guidance for the second quarter,
position us to achieve greater than 20%
annual revenue growth.”
Also on Tuesday, Goldman Sachs in a
research report termed tablet computers such as the iPad "one of the most
disruptive forces in computing" in nearly 30 years. Analysts at the
investment bank said tablets are eating into the traditional PC market and will
be a challenge for the PC industry currently dominated by Microsoft and Intel,
in the earnings stakes.
"Significantly, most tablets are not utilizing Intel microprocessors or a
Microsoft operating system, and this allows new companies such as Apple and
Google to encroach on" those companies, says the report.
Goldman estimates that tablets will cannibalize about 35% of the PC market in
2011 and 33% in 2012. "This should result in a theoretical loss of 21m
notebooks in 2011 and 26.5m in 2012," the report says. "But while some
tablet units will be replacing computers, the other 65% to 67% will be purchased
in addition to PCs and therefore will increase the overall PC market."
Goldman says the Apple iPad will hold a 64% share of the tablet market this year
and the analysts estimate that 60.1m tablets will be sold in 2011 - - up from
17.9m in 2010, when the iPad was launched.