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October 12, 2010, 4:37 PM EDT
By Ian King
Oct. 12 (Bloomberg) -- Intel Corp., the world?s biggest chipmaker, predicted fourth-quarter sales that beat analysts? estimates, an indication consumer demand for computers may be rebounding.
Revenue this period will be $11.4 billion, plus or minus $400 million, Santa Clara, California-based Intel said in a statement today. That compares with an average projection of $11.3 billion, according to a Bloomberg survey.
Consumers stepped up purchases of computers in September, helping Intel bounce back from the slump that forced it to cut its third-quarter revenue forecast in August. Renewed buying was driven by price cuts and may not last through year?s end, said Tristan Gerra, an analyst at Robert W. Baird & Co.
?There was a significant rebound in the PC supply chain in the month of September and it looks like it continued in October,? said Gerra, who has a ?neutral? rating on Intel shares and doesn?t own any. ?We don?t believe that this rebound is sustainable. Inherently there are weaknesses.?
Intel gained in extended trading. Earlier, it rose 21 cents, or 1.1 percent, to $19.77 in Nasdaq Stock Market trading at 4 p.m. New York time. The stock has declined 3.1 percent this year.
Third-quarter net income was $2.96 billion, or 52 cents a share, compared with $1.86 billion, or 33 cents, a year earlier. Analysts had estimated a profit of 50 cents a share. Revenue increased 18 percent to $11.1 billion, compared with an average prediction of $11 billion.
Margin Forecast
Gross margin, the only profit indicator that Intel forecasts, will be 67 percent, plus or minus ?a couple? percentage points, this quarter. The measure of profitability -- the percentage of sales remaining after deducting production costs -- was 66 percent in the third quarter.
In August, when Intel revised projections, it said gross margins wouldn?t reach the higher end of an earlier forecast, coming in at 66 percent, plus or minus a point. That compares with a prior forecast of 67 percent, plus or minus ?a couple? of points. At the time, Intel said third-quarter results would be lower than previously expected, citing weaker-than-anticipated consumer demand for personal computers in mature markets.
Sales would be $11 billion, plus or minus $200 million, compared with a previously forecast range of $11.2 billion to $12 billion, Intel said then.
Intel, whose chips run more than 80 percent of the world?s personal computers, kicks off three weeks of earnings reports by the largest U.S. technology companies, including International Business Machines Corp., Google Inc. and Microsoft Corp.
(Intel will hold a conference call to discuss the results, beginning at 5:30 p.m. New York time. Dial +1 877-445-4607 and use passcode 95629973 to listen or go to {LIVE }.)
--Editors: Tom Giles, Lisa Wolfson.
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net
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Oct. 12 (Bloomberg) -- Intel Corp., the world?s biggest chipmaker, predicted fourth-quarter sales that beat analysts? estimates, an indication consumer demand for computers may be rebounding.
Revenue this period will be $11.4 billion, plus or minus $400 million, Santa Clara, California-based Intel said in a statement today. That compares with an average projection of $11.3 billion, according to a Bloomberg survey.
Consumers stepped up purchases of computers in September, helping Intel bounce back from the slump that forced it to cut its third-quarter revenue forecast in August. Renewed buying was driven by price cuts and may not last through year?s end, said Tristan Gerra, an analyst at Robert W. Baird & Co.
?There was a significant rebound in the PC supply chain in the month of September and it looks like it continued in October,? said Gerra, who has a ?neutral? rating on Intel shares and doesn?t own any. ?We don?t believe that this rebound is sustainable. Inherently there are weaknesses.?
Intel gained in extended trading. Earlier, it rose 21 cents, or 1.1 percent, to $19.77 in Nasdaq Stock Market trading at 4 p.m. New York time. The stock has declined 3.1 percent this year.
Third-quarter net income was $2.96 billion, or 52 cents a share, compared with $1.86 billion, or 33 cents, a year earlier. Analysts had estimated a profit of 50 cents a share. Revenue increased 18 percent to $11.1 billion, compared with an average prediction of $11 billion.
Margin Forecast
Gross margin, the only profit indicator that Intel forecasts, will be 67 percent, plus or minus ?a couple? percentage points, this quarter. The measure of profitability -- the percentage of sales remaining after deducting production costs -- was 66 percent in the third quarter.
In August, when Intel revised projections, it said gross margins wouldn?t reach the higher end of an earlier forecast, coming in at 66 percent, plus or minus a point. That compares with a prior forecast of 67 percent, plus or minus ?a couple? of points. At the time, Intel said third-quarter results would be lower than previously expected, citing weaker-than-anticipated consumer demand for personal computers in mature markets.
Sales would be $11 billion, plus or minus $200 million, compared with a previously forecast range of $11.2 billion to $12 billion, Intel said then.
Intel, whose chips run more than 80 percent of the world?s personal computers, kicks off three weeks of earnings reports by the largest U.S. technology companies, including International Business Machines Corp., Google Inc. and Microsoft Corp.
(Intel will hold a conference call to discuss the results, beginning at 5:30 p.m. New York time. Dial +1 877-445-4607 and use passcode 95629973 to listen or go to {LIVE }.)
--Editors: Tom Giles, Lisa Wolfson.
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net
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