Intel Raises 2nd-Quarter Revenue Estimate
Posted on: Thursday, 9 June 2005, 21:00 CDT
Jun. 10--Intel on Thursday raised its second-quarter revenue estimate, attributing the boost to strong sales of portable computers.
The world's biggest chip maker said in its mid-quarter update that sales are expected to be $9.1 billion to $9.3 billion for the second quarter, which ends July 2. That's well above Intel's previous guidance of $8.6 billion to $9.2 billion.
The Santa Clara company said its gross profit margin will be 56 percent to 58 percent, compared to its earlier estimate of 54 percent to 58 percent.
Wall Street anticipated a positive update. Intel shares rose 60 cents to $27.70 a share Thursday. But in after-hours trading, Intel shares fell to $27.33 a share.
Intel Chief Financial Officer Andy Bryant said in a conference call with analysts that demand for microprocessors was strong in all geographic markets. He also said costs for microprocessors are lower than expected, which will help overall profit.
"I think I'm pretty comfortable," Bryant said. "Demand feels pretty good right now."
If an extra week in the first quarter is discounted, then the second-quarter results are likely to be better than seasonal expectations would suggest, according to Bryant.
Analysts had expected sales to be $8.99 billion, according to Thomson First Call. Intel has now raised its mid-quarter estimates three quarters in a row.
The announcement will likely be a positive for tech stocks. But Raymond James analyst Ashok Kumar was cautious about interpreting the news as good for the entire computer industry.
He said that Intel has been gaining share in portable computers thanks to its Centrino marketing campaign and its focus on designing low-power mobile chips.
"The notebook market is accelerating, but overall PC sales are lukewarm," Kumar said. "I wouldn't extrapolate these results for the rest of the PC market."
Intel also expanded international sales, beefing up its sales offices in places like China and India. About 70 percent of Intel's sales are overseas now.
Bryant did note his concern that Intel wasn't able to make enough support chips, know as chip sets for personal computers.
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Source: San Jose Mercury News
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