Intel Raises Quarterly Sales Outlook on Strong Demand
Chip maker Intel Corp. raised its quarterly sales forecast Thursday for the first time in more than a year, citing strong demand for its microprocessors that run most of the world’s personal and corporate computers.
The upbeat fourth-quarter forecast from Santa Clara, Calif.-based Intel, a barometer of the tech sector’s health, came on the same day that technology market researcher IDC said it expected semiconductor sales to increase 26% in 2004 but fall 2% in 2005 because of supplier overproduction. Sales should grow again in 2006, IDC said.
Intel’s prediction “will be viewed positively, and it helps the sector,” said Apjit Walia, a semiconductor analyst in New York with investment bank RBC Capital Markets. “But I wouldn’t say we’re out of the doldrums.”
Intel Chief Financial Officer Andy Bryant told analysts that revenue for the three months ending Dec. 31 was likely to be $9.3 billion to $9.5 billion, up from the previous estimate of $8.6 billion to $9.2 billion.
“Revenues from microprocessors and chipsets are greater than anticipated in all major segments and geographies,” Bryant said, adding that the company expected to earn record revenue for the quarter and for the year.
Intel shares rose $1.72 to $24.43 in after-hours Nasdaq trading. They had fallen 39 cents to $22.71 in regular trading.
Other semiconductor stocks also got a boost. Advanced Micro Devices Inc. of Sunnyale, Calif., the second-largest maker of computer microprocessors, gained 84 cents to $23.46 on the New York Stock Exchange after the market closed. In Nasdaq after-hours trading, Irvine-based Broadcom Corp., which produces wireless and broadband communications chips, gained $1.28 to $34.79, while cellphone chip maker Qualcomm Inc. of San Diego rose 53 cents to $44.15.
Intel’s revised figures don’t shed much light on the chip market next year, RBC Capital Markets’ Walia said. “It’s more of an interim call. I don’t think there’s much visibility into 2005.”
The IDC report said fluctuations in demand obliged chip manufacturers to slow production in the second half of 2004.
“The correction was brought on by production plans that outstripped real demand,” said Mario Morales, IDC’s vice president of semiconductor research. “These inventories will linger into the first half of 2005 as suppliers adjust to meet market conditions.”
Still, 2004 will be a strong year overall for the semiconductor industry, with revenue reaching $210 billion, the IDC report said.
Thursday marked the first time that Intel had raised its sales estimate since the third quarter of 2003. For the next three quarters, it narrowed its revenue projection to within previously stated ranges. In the third quarter of this year, Intel lowered its forecast, citing lower-than-expected demand for its computer processor and memory chips.
