Intel’s 4th-Quarter Sales, Earnings May Top Its Forecasts
Intel Corp., the world’s largest computer-chip maker, is expected to report higher fourth-quarter sales and earnings, topping even its own optimistic forecasts amid a surge in holiday PC buying.
Intel is expected to report profit Tuesday of $1.07 a share, the average estimate of analysts polled by First Call Corp. Some analysts expect profit of $1.10 a share on sales of $7.4 billion. Intel said in November that revenue would rise as much as 10% from the third quarter, more than originally expected.
Intel wasn’t able to meet demand for some of its products in the quarter as personal computer demand soared to its strongest levels of the year. Profit also is expected to have been boosted by new, faster Xeon processors and price cuts on its low-cost Celeron chips, meant to spark sales.
In the year-ago fourth quarter, Santa Clara-based Intel reported profit of $1.74 billion, or 98 cents a share, on sales of $6.51 billion.
Intel shares rose 44 cents to close at $129.69 on Nasdaq. The stock has gained 65% in the last three months.
PC manufacturers and chip makers struggled in the first half of the year with weaker-than-expected PC sales, causing them to slow production while cutting prices to get rid of excess inventory. Now, inventories are down to just a few weeks at most PC makers, and Intel is trying to keep up with demand.
Worldwide sales of semiconductors rose 4.9% in November from those in October, the fourth month of growth for the rebounding industry, according to the Semiconductor Industry Assn. Chip sales totaled $11.4 billion in November, up from $10.9 billion in October.
Further, market research firm PC Data Inc. said that retail PC shipments rose about 41% in December from a year ago as consumers scooped up low-cost computers for the home.
PC Data said retailers shipped 900,000 to 1 million PCs in December. Revenue rose just 10% for the month to about $1 billion, though, because of deep price cuts.
“I don’t see any signs of things slowing down,” said Steve Baker, an analyst at PC Data in Reston, Va. The numbers his firm tallied for December are still estimates, Baker said. He expects to have final numbers early next week.
Intel’s gross margin, or the percentage of sales remaining after the costs of production are subtracted, is expected to widen to about 55% from 53% in the third quarter.
The momentum is expected to continue in the first half of 1999, analysts said, as companies look to replace older PCs to be sure they can properly recognize the year 2000. Intel also unveiled new, faster Celeron and Xeon chips and plans to introduce more processors for laptops as well as a new chip with better graphics capabilities.
