Intel profits hit by legal bills

Chip giant Intel has reported quarterly profits which represent double-digit increases over the same period a year ago. But it missed analysts' expectations, due to charges related to the settlement of a patent suit filed against it by Intergraph.

The chipmaker's net profits for the quarter totalled $1.7bn, or 26 cents per share. Revenue for the quarter, which ended 27 March, was $8.1bn. The numbers were significantly higher than for the same period a year ago, when Intel reported earnings of $915m, or 14 cents per share, on revenue of $6.8bn.

But, on average, 33 analysts had expected Intel to earn a profit of 27 cents per share, according to a survey by earnings tracker Thompson First Call. Meanwhile, a group of 29 analysts expected the chipmaker to turn in $8.16bn in revenue, on average.

Intel did meet its own predictions for the quarter. On 4 March, Intel said it would turn in revenue of between $8bn and $8.2bn.

However, a $162 million charge, related to the settlement of the Intergraph suit, reduced Intel's per-share profit by 1.7 cents. The lawsuit claimed that Intel's Itanium processor violated patents related to Intergraph's Clipper processor. Intel and Intergraph settled the suit for $225m on 30 March. The remainder of the settlement, $63m, will be paid out over five years, Intel said in its earnings release.

Despite the charge, Intel executives said the company had a good quarter.

Craig Barrett, Intel's CEO, said in a statement: "Intel's first-quarter results showed healthy growth in both revenue and earnings, compared to a year ago, led by improvement in worldwide IT spending."

Looking ahead, Intel expects revenue of between $7.6bn and $8.2bn in the second quarter of 2004, meaning that it might fare either slightly worse or slightly better than in the first quarter.

John G Spooner writes for News.com