Intel and Microsoft Report Record Quarterly Results Amid Growing Competition

Strategic Insights -

In a surprise move, Intel, the world's largest chip maker, and Microsoft, the dominant player in the personal computer software business, have announced record quarterly results, despite growing competition in the industry. Intel's revenue and net income outpaced the same period last year, with revenue reaching $2.66 billion and net income standing at $617 million. Meanwhile, Microsoft reported a significant increase in sales and net profit, but a major charge due to a patent infringement lawsuit.

Key Takeaways:

  • Intel's revenue increased by 31.7% year-over-year, reaching $2.66 billion in the first quarter, with net income rising by 12.6% to $617 million.
  • The company's gross margins declined to 58% in the first quarter, compared to 61% in the last quarter of 1993, due to increased production of lower-margin products.
  • Intel directors attributed the decline in gross margins to the increased production of standard chips and PC motherboards, rather than pressure on its high-performance chips like the 486 and Pentium.
  • Microsoft reported a 29.6% increase in sales, rising from $958 million to $1.24 billion in the third quarter.
  • Net profit for Microsoft increased by 5.5% year-over-year, reaching $256 million, despite a $120 million after-tax charge due to a patent infringement lawsuit.
  • Intel's chief executive, Andy Grove, attributed the company's growth to the steady migration of computer buyers towards higher-performance systems.
  • Sales of Intel's high-performance Pentium chip increased substantially during the quarter, with microprocessor orders running at record levels.

Statistics:

  • Intel's revenue: $2.66 billion (up 31.7% year-over-year)
  • Intel's net income: $617 million (up 12.6% year-over-year)
  • Gross margins: 58% (down from 61% in the last quarter of 1993)
  • Microsoft's sales: $1.24 billion (up 29.6% year-over-year)
  • Microsoft's net profit: $256 million (up 5.5% year-over-year)
  • Patent infringement charge: $120 million after-tax
  • Growth in sales of Intel's high-performance Pentium chip: substantial increase during the quarter
  • Microprocessor orders: running at record levels

Sources:

  • Intel's financial press release (no date)
  • Microsoft's financial press release (no date)