Intel Revises Its Third-Quarter Sales Estimates Upward
Intel Corp. said Monday that it expects third-quarter sales to rise at least 5% from the $4.62 billion it reported for the second quarter, an improvement from earlier expectations of unchanged sales.
The world’s largest chip maker said its gross profit margin will be wider than the low-50% range it had predicted. Intel said customers are ordering more chips for immediate delivery and that those orders are indicating better-than-expected results.
Santa Clara-based Intel is the only supplier of its Pentium and Pentium Pro chips, which are used in almost all new personal computers. The company had originally planned to make price cuts in November but it canceled those and instead made deeper ones in August in an effort to increase its sales.
According to Intel’s forecast, computer makers are building more computers in expectation of strong PC demand for the fourth-quarter holiday sales season. Personal computer sales are expected to increase 21% for the last three months of the year, analysts said. Personal computers represent the biggest market of Intel chips.
Intel, which is scheduled to report its third-quarter results after the close of trading Oct. 14, had been expected to post per-share earnings of $1.13, based on the average estimate of 26 analysts surveyed by IBES International Inc.
Intel shares rose 50 cents to $88.625 on Nasdaq. The announcement was made after the close of U.S. markets Monday.
For the second quarter, Intel earned $1.04 billion, or $1.17 a share, with a gross margin of 53.5%. For last year’s third quarter, Intel earned $931 million, or $1.05 a share, on sales of $4.17 billion.
Other chip makers are predicting that their earnings will be lower than expected because of falling prices and a slower pace of orders, particularly in the memory-chip market. Analysts said Intel is actually benefiting from those lower prices as well as from its own price cuts because they are spurring demand for PCs.
“We’re seeing the elastic effect of lower component prices stimulating demand for PCs, and Intel is a direct beneficiary of that,” said analyst Andrew Neff of Bear Stearns & Co., who expects to raise his earnings estimate from $1.09.
