Intel Q3 results disappoint, outlook cloudy
Caught in PC Doldrums
Intel's third quarter results, released on Tuesday, showed profits significantly higher than the previous year, but short of analysts' expectations.
The world's largest chipmaker earned $686m, or $0.10 a share, in the third quarter, compared with a profit of $106m, or $0.02 a share, in the same period last year. Though higher, the company's per share earnings came in well behind analysts' expectations of earnings of $0.13 a share.
Excluding acquisition-related costs of approximately $108m, the company's net income in the third quarter was $768m, while earnings were $0.11 per share. Third quarter revenues fell slightly to $6.50bn from $6.55bn.
The company blamed the shortfalls in its numbers on continuing weakness in the PC market and said that the outlook for the fourth quarter remained uncertain because of global economic uncertainty. Said Craig Barrett, Intel chief executive officer in statement: "Although the industry is experiencing one of its worst downturns ever, we continue to move our technology forward, introducing 18 new processors during the quarter, all on our leading-edge 0.13-micron technology.
"Going forward, we remain committed to investments in new products and technologies, setting the stage for us to emerge even stronger when the economy and demand recover."
On Tuesday, shares in Intel in New York closed up 9 per cent during regular trading, but fell by nearly 13 per cent in after hours trading, shortly after the results were released.
Though still profitable, the firm's results reflect the continuing weakness in the chip industry which is reeling after two years of poor results, partially thanks to slower PC demand and falling processor prices. AMD, Intel's biggest competitor, warned recently that its third quarter revenues would fall $100m short of earlier expectations.
Looking forward, Intel also forecast a possible continuation of the chip industry woes saying that sales outlook for the fourth quarter remained uncertain. It expects revenues of between $6.5bn and $6.9bn for the period. Despite the significant improvement in profits over the same period last year, Intel also lowered its capital expenditure estimate to $4.7bn from earlier estimates of $5bn to $5.2bn. The company said that cost savings within ongoing construction projects would account for most of the reduction in capital expenditure.