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Intel Tightens Forecast; 3rd-Quarter Revenue of $9.8 Billion to $10 Billion Expected

Posted on: Monday, 12 September 2005, 18:00 CDT

SAN JOSE, Calif. -- Citing continued demand for the chips that power notebook computers, Intel Corp. tightened the range of its third-quarter revenue forecast Thursday but kept the midpoint unchanged at $9.9 billion.

The world's largest maker of PC microprocessors said it now expects revenue to be between $9.8 billion and $10 billion, compared with its previous estimate of $9.6 billion to $10.2 billion.

"Operating results for the quarter are consistent with our outlook in July," said Andy Bryant, Intel's chief financial officer. "We continue to see healthy growth worldwide in the PC market and in Intel's revenue and gross profit."

Wall Street analysts expect the Santa Clara, Calif.-based company to earn 36 cents per share on sales of $9.92 billion, according to a survey by Thomson Financial.

As with previous quarters, the company reported strong demand for its Centrino chips designed for wireless-enabled laptop computers. The chips, like the computers, carry a price premium over those built for desktops.

Intel said it continues to see double-digit year-over-year growth driven by notebook demand.

But some analysts are concerned that while demand is strong, Intel may be struggling to meet demand, particularly with chipsets that control communication between the processor and the rest of the computer.

Apjit Walia, a semiconductor analyst at RBC Capital Markets, said it appears the company has made some progress in easing the supply issue.

"However, we don't expect Intel to post a big upside to consensus estimates this quarter as we don't believe the supply issues have been fully resolved yet," he said in a research note.

Bryant said chipsets will remain tight.

"Any capacity additions we are putting in place won't yield much to us until the first part of 2006," he said.

The update was released after markets ended trading. Intel shares closed at $26.09, up 43 cents, or 1.7 percent, on the Nasdaq Stock Market. In after-hours trading, they lost 20 cents.

Local angle

Intel is Oregon's largest private employer with 15,000 workers in the Portland metropolitan area. The company also contributes to related high-tech employment in Clark County at businesses such as SEH America, which manufactures silicon wafers for the chip industry.

Source: Columbian

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