PC Chip Sales for This Quarter Meeting Forecasts, Intel Says
Intel Corp. cheered investors Thursday by sticking to its revenue predictions for the quarter ending in June, as executives said semiconductor sales were holding up with earlier forecasts.
The top maker of microprocessors for computers said orders for those chips were typical for this time of year, although products for the communications industry were weaker than expected.
“There’s not a disaster anyplace,” Intel’s chief financial officer, Andy Bryant, told analysts in a conference call. “It’s just routine business.”
Intel said sales for the current quarter would be toward the low end of its estimates from April of $6.2 billion to $6.8 billion. Several analysts had expected Intel to lower that sales range, as it had issued warnings in each of the last three quarters.
In the last week, other major technology firms, including Hewlett-Packard Co. and Sun Microsystems Inc., warned of poorer-than-expected results.
Intel shares rose $1.32 to $31.14 before the announcement, then climbed to $32.35 in after-hours trading.
Seeing better times ahead, some investors have been returning to chip makers after months of beating them down. Shares of Broadcom Corp., the Irvine communications chip maker, rose 12% on Thursday despite a lowered revenue outlook for the current quarter.
Intel’s Bryant said it was too early to say how much the company would benefit from a rush of computers being made for the back-to-school buying season. But he said that June, when those chip orders traditionally start coming, “is just expected to be a routine June.”
Intel benefited in part by lowering expectations so much before. Analysts have been expecting per-share earnings of 11 cents in the second quarter, down from 45 cents, or $3.1 billion, a year earlier.
“We’re closer to the bottom, whether it’s here or 5% [lower],” said analyst Ashok Kumar of U.S. Bancorp Piper Jaffray.
The Semiconductor Industry Assn. said Wednesday that worldwide chip sales will fall 14% this year but will increase dramatically next year.
Intel said it is ahead of schedule in cutting 5,000 jobs and has reduced travel and other discretionary spending substantially.
Computer shipments have been slumping since late last year, and in the first quarter home PC sales fell 13% worldwide. Some major vendors are reporting increasing economic problems in Asia and elsewhere.
But the manufacturers are hoping for a boost from Microsoft Corp.’s Windows XP software this fall, and a price war among Dell Computer Corp., Compaq Computer Corp. and Gateway Inc. may be helping sell more machines with Intel chips. “They’re going to get some units out the door,” said analyst Eric Ross of Thomas Weisel Partners.
On Wednesday, Broadcom said it expected revenue to decrease 32% to 35% from the first quarter, far worse than the 23% drop the company had previously anticipated. The company said it expected gross revenue in the range of $205 million to $215 million, down from $318.1 million in the first quarter.
Broadcom Chief Executive Henry T. Nicholas III provided investors with the nugget of hope they were waiting for, telling analysts in a conference call Thursday that the canceled and delayed orders that have plagued the firm all year have showed signs of abating.
“We’re starting to see the light at the end of the tunnel,” Nicholas said, although he cautioned that the signs were only preliminary. “We’re beginning to see some increase in new ordering.”
Another chip maker, National Semiconductor Corp., on Thursday posted a fourth-quarter loss of $44.4 million, or 26 cents a share, for the period ended May 27, compared with profit from operations of $134.2 million, or 68 cents, a year earlier. Sales fell by a third to $401.2 million.
Sales in the quarter ending in August are expected to drop 15% to 20% from the fourth quarter to $320 million to $340 million, the company said.
Yet another chip rival, Advanced Micro Devices, said this week it expects a small gain in revenue this year.
“People are just confused,” Dan Niles of Lehman Bros. said of investors. “They desperately want to believe the worst is over.”
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Staff writer Karen Alexander contributed to this article.
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Bad News, No Bears?
Shares of several technology firms have rallied this week despite the companies’ reports that business remains weak. A sampling:
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Ticker Thurs. Percentage change: Stock symbol close This week YTD Broadcom BRCM $40.24 +19.2% -52.1% Xilinx XLNX 49.37 +18.1 +7.0 FreeMarkets FMKT 14.32 +18.0 -24.6 Cypress Semi. CY 25.14 +16.4 +27.7 Texas Instruments TXN 39.39 +15.0 -16.9 Intel INTC 31.14 +8.4 +3.6 Hewlett-Packard HWP 29.25 unch. -7.3 Nasdaq composite 2,264.00 +5.3 -8.4
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Source: Bloomberg News
