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January 13, 2011, 5:40 PM EST
By Ian King
(Updates with fund manager’s comment in fourth paragraph.)
Jan. 13 (Bloomberg) -- Intel Corp., the world’s biggest chipmaker, forecast first-quarter sales that may exceed analysts’ estimates as companies boost spending on computers and servers.
Revenue will range from $11.1 billion to $11.9 billion, Intel said today in a statement. That compares with the $10.7 billion average of analysts’ projections compiled by Bloomberg.
Sales may rise 10 percent this year, Chief Financial Officer Stacy Smith said in an interview. While consumer demand for notebook computers has stayed sluggish as the economy rebounds from recession, companies are updating their fleets of computers and servers, which run business networks and websites.
“It was a great quarter,” said Pat Becker Jr. of Becker Capital Management Inc., which holds shares of Intel as part of the $2.2 billion it oversees in Portland, Oregon. “The enterprise market has come back from the downturn.”
Intel, based in Santa Clara, California, gained 2.6 percent to $21.85 in late trading after falling 1 cent to $21.29 earlier on the Nasdaq Stock Market. It advanced 3.1 percent last year.
Fourth-quarter net income jumped 48 percent to $3.39 billion, or 59 cents a share, from $2.28 billion, or 40 cents, a year earlier. Analysts had estimated profit of 53 cents a share. Sales increased 8.4 percent to $11.5 billion, compared with an average prediction of $11.4 billion.
Chip-Equipment Rally
Applied Materials Inc. and other chip-equipment makers rose after Intel raised its spending budget for the year. Intel plans to spend between $8.7 billion and $9.3 billion on plants and equipment, compared with $5.2 billion in 2010.
Applied, the world’s largest maker of chip-making machinery, gained 5.3 percent in extended trading. Novellus Systems Inc. climbed 4.1 percent, KLA-Tencor Corp increased 5.7 percent, and Lam Research Corp. rose 2 percent.
Demand from businesses, especially for server computers, led to record microprocessor revenue, Smith said in a statement.
“2010 was by far our most profitable year,” Smith said, even amid “a continuation of the softness we saw in the consumer market segment we started seeing in the middle of the year.”
Gross margin, the only indicator of profitability that Intel forecasts, will be about 64 percent this quarter, the company said. The margin -- the percentage of sales remaining after deducting production costs -- was 67.5 percent in the fourth period.
Intel’s first quarter will consist of 14 weeks, compared with the usual 13 weeks, the company said this month. Some analysts’ estimates may not have taken this into account. The longer first quarter occurs once every five or six years, according to Intel.
Full-Year Forecast
Intel said gross margin for the full year will be about 65 percent, plus or minus a few percentage points. That compares with the 64.2 percent average of predictions in a Bloomberg survey.
While Intel posted record profit and sales last year, investors are concerned by the failure to parlay its dominance in personal-computer processors into market share for mobile- phone and tablet chips.
Apple Inc.’s iPad tablet computer works on a mobile-phone processor based on technology from ARM Holdings Plc. Makers of rival tablets are also opting for less power-hungry chip designs than Intel currently offers.
“The bear case is circled around maturity in the business, mobile and tablets,” said Becker at Becker Capital Management. “The bull case is around valuation, manufacturing expertise and a belief that these guys will come back with a robust mobile and tablet strategy.”
Intel, whose chips run more than 80 percent of the world’s PCs, 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 began a conference call with analysts to discuss the results at 5:30 p.m. New York time. Go to {LIVE } or call +1-877-445-4607 and give the passcode 25835771 to listen.)
--With assistance from Joseph Galante in San Francisco. Editors: Lisa Wolfson, Jillian Ward
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 fund manager’s comment in fourth paragraph.)
Jan. 13 (Bloomberg) -- Intel Corp., the world’s biggest chipmaker, forecast first-quarter sales that may exceed analysts’ estimates as companies boost spending on computers and servers.
Revenue will range from $11.1 billion to $11.9 billion, Intel said today in a statement. That compares with the $10.7 billion average of analysts’ projections compiled by Bloomberg.
Sales may rise 10 percent this year, Chief Financial Officer Stacy Smith said in an interview. While consumer demand for notebook computers has stayed sluggish as the economy rebounds from recession, companies are updating their fleets of computers and servers, which run business networks and websites.
“It was a great quarter,” said Pat Becker Jr. of Becker Capital Management Inc., which holds shares of Intel as part of the $2.2 billion it oversees in Portland, Oregon. “The enterprise market has come back from the downturn.”
Intel, based in Santa Clara, California, gained 2.6 percent to $21.85 in late trading after falling 1 cent to $21.29 earlier on the Nasdaq Stock Market. It advanced 3.1 percent last year.
Fourth-quarter net income jumped 48 percent to $3.39 billion, or 59 cents a share, from $2.28 billion, or 40 cents, a year earlier. Analysts had estimated profit of 53 cents a share. Sales increased 8.4 percent to $11.5 billion, compared with an average prediction of $11.4 billion.
Chip-Equipment Rally
Applied Materials Inc. and other chip-equipment makers rose after Intel raised its spending budget for the year. Intel plans to spend between $8.7 billion and $9.3 billion on plants and equipment, compared with $5.2 billion in 2010.
Applied, the world’s largest maker of chip-making machinery, gained 5.3 percent in extended trading. Novellus Systems Inc. climbed 4.1 percent, KLA-Tencor Corp increased 5.7 percent, and Lam Research Corp. rose 2 percent.
Demand from businesses, especially for server computers, led to record microprocessor revenue, Smith said in a statement.
“2010 was by far our most profitable year,” Smith said, even amid “a continuation of the softness we saw in the consumer market segment we started seeing in the middle of the year.”
Gross margin, the only indicator of profitability that Intel forecasts, will be about 64 percent this quarter, the company said. The margin -- the percentage of sales remaining after deducting production costs -- was 67.5 percent in the fourth period.
Intel’s first quarter will consist of 14 weeks, compared with the usual 13 weeks, the company said this month. Some analysts’ estimates may not have taken this into account. The longer first quarter occurs once every five or six years, according to Intel.
Full-Year Forecast
Intel said gross margin for the full year will be about 65 percent, plus or minus a few percentage points. That compares with the 64.2 percent average of predictions in a Bloomberg survey.
While Intel posted record profit and sales last year, investors are concerned by the failure to parlay its dominance in personal-computer processors into market share for mobile- phone and tablet chips.
Apple Inc.’s iPad tablet computer works on a mobile-phone processor based on technology from ARM Holdings Plc. Makers of rival tablets are also opting for less power-hungry chip designs than Intel currently offers.
“The bear case is circled around maturity in the business, mobile and tablets,” said Becker at Becker Capital Management. “The bull case is around valuation, manufacturing expertise and a belief that these guys will come back with a robust mobile and tablet strategy.”
Intel, whose chips run more than 80 percent of the world’s PCs, 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 began a conference call with analysts to discuss the results at 5:30 p.m. New York time. Go to {LIVE } or call +1-877-445-4607 and give the passcode 25835771 to listen.)
--With assistance from Joseph Galante in San Francisco. Editors: Lisa Wolfson, Jillian Ward
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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