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October 13, 2010, 9:42 AM EDT
By Ian King
(Updates with today?s trading in seventh paragraph.)
Oct. 13 (Bloomberg) -- Intel Corp., the world?s biggest chipmaker, predicted fourth-quarter sales that beat analysts? estimates, helped by demand in emerging economies.
Revenue this period will be $11.4 billion, plus or minus $400 million, Santa Clara, California-based Intel said yesterday in a statement. That compares with an average projection of $11.3 billion, according to data compiled by Bloomberg.
Corporations and households in less developed markets bought more computers, helping Intel weather slumping demand among consumers in the U.S. and Europe, Intel Chief Financial Officer Stacy Smith said in an interview. The results bode well for computer makers, including Dell Inc. and Hewlett-Packard Co., which also benefit as businesses upgrade dated machines.
?It?s clearly a positive for those companies in the PC and enterprise space,? said Pat Becker Jr. of Becker Capital Management Inc. in Portland, Oregon. The company owns shares of Intel as part of the $2.2 billion it oversees. ?The margins in that help overcome some of the weakness we?ve seen in the consumer in August.?
The last four weeks of the quarter were better than the company predicted, Smith said on a call with analysts. That improving demand was the basis for the company?s predictions for the fourth quarter. Component inventory remains ?lean? throughout the computer supply chain, he said.
No Double Dip
Chief Executive Officer Paul Otellini said the PC industry is still on course to grow 18 percent this year. He doesn?t anticipate a double-dip recession and sees 2011 as being a ?pretty good? year for computer sales.
Intel rose 2 cents to $19.79 in Nasdaq Stock Market trading at 9:39 a.m. New York time. The shares had lost 3.1 percent this year before today.
Third-quarter net income rose 59 percent to $2.96 billion, or 52 cents a share, from $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.
Gross margin, the only profit indicator that Intel forecasts, will be 67 percent this quarter, plus or minus ?a couple? of percentage points, the company said. The margin -- the percentage of sales remaining after deducting production costs -- was 66 percent in the third quarter.
Developing Economies
?We saw demand strength in emerging markets and the enterprise segment of the market,? Smith said in the interview. ?It was offset by consumer demand in developed markets being a little less than we thought when we started the quarter.?
In August, when Intel revised projections, it said gross margins wouldn?t reach the high end of an earlier forecast, coming in at 66 percent, plus or minus a point. 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.
Otellini downplayed the threat posed by Apple Inc.?s iPad and other tablet computers that don?t feature Intel chips. Tablet sales won?t undermine PC demand, and Intel is winning contracts to get its chips into the devices, he said.
?You?re dealing with numbers that are relatively small,? Otellini said. ?It gets to be a factor, but a secondary factor.?
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.
The company -- which agreed to buy McAfee Inc. for $7.68 billion last quarter, its biggest acquisition -- isn?t currently considering another ?large? purchase, Smith said.
--With assistance from Joseph Galante in San Francisco. Editors: Tom Giles, Nick Turner
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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(Updates with today?s trading in seventh paragraph.)
Oct. 13 (Bloomberg) -- Intel Corp., the world?s biggest chipmaker, predicted fourth-quarter sales that beat analysts? estimates, helped by demand in emerging economies.
Revenue this period will be $11.4 billion, plus or minus $400 million, Santa Clara, California-based Intel said yesterday in a statement. That compares with an average projection of $11.3 billion, according to data compiled by Bloomberg.
Corporations and households in less developed markets bought more computers, helping Intel weather slumping demand among consumers in the U.S. and Europe, Intel Chief Financial Officer Stacy Smith said in an interview. The results bode well for computer makers, including Dell Inc. and Hewlett-Packard Co., which also benefit as businesses upgrade dated machines.
?It?s clearly a positive for those companies in the PC and enterprise space,? said Pat Becker Jr. of Becker Capital Management Inc. in Portland, Oregon. The company owns shares of Intel as part of the $2.2 billion it oversees. ?The margins in that help overcome some of the weakness we?ve seen in the consumer in August.?
The last four weeks of the quarter were better than the company predicted, Smith said on a call with analysts. That improving demand was the basis for the company?s predictions for the fourth quarter. Component inventory remains ?lean? throughout the computer supply chain, he said.
No Double Dip
Chief Executive Officer Paul Otellini said the PC industry is still on course to grow 18 percent this year. He doesn?t anticipate a double-dip recession and sees 2011 as being a ?pretty good? year for computer sales.
Intel rose 2 cents to $19.79 in Nasdaq Stock Market trading at 9:39 a.m. New York time. The shares had lost 3.1 percent this year before today.
Third-quarter net income rose 59 percent to $2.96 billion, or 52 cents a share, from $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.
Gross margin, the only profit indicator that Intel forecasts, will be 67 percent this quarter, plus or minus ?a couple? of percentage points, the company said. The margin -- the percentage of sales remaining after deducting production costs -- was 66 percent in the third quarter.
Developing Economies
?We saw demand strength in emerging markets and the enterprise segment of the market,? Smith said in the interview. ?It was offset by consumer demand in developed markets being a little less than we thought when we started the quarter.?
In August, when Intel revised projections, it said gross margins wouldn?t reach the high end of an earlier forecast, coming in at 66 percent, plus or minus a point. 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.
Otellini downplayed the threat posed by Apple Inc.?s iPad and other tablet computers that don?t feature Intel chips. Tablet sales won?t undermine PC demand, and Intel is winning contracts to get its chips into the devices, he said.
?You?re dealing with numbers that are relatively small,? Otellini said. ?It gets to be a factor, but a secondary factor.?
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.
The company -- which agreed to buy McAfee Inc. for $7.68 billion last quarter, its biggest acquisition -- isn?t currently considering another ?large? purchase, Smith said.
--With assistance from Joseph Galante in San Francisco. Editors: Tom Giles, Nick Turner
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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