Intel increases sales, margin guidance
Intel Corp raised its fourth quarter forecast yesterday after a better than expected performance in its core Intel Architecture business.
The chip giant said yesterday that it expects revenues for the fourth quarter to be between $6.8bn and $7bn, compared to its original forecast of $6.5bn to $6.9bn. The increased revenue will also benefit its gross margin, which it said will be at the upper end of its previous guidance, which was for 49% give or take a couple of points.
As well as the better than expected IA performance, the company said its communications business's performance was in line with its earlier expectations.
Intel's CFO, Andy Bryant, downplayed any suggestion that the figures represented a sharp bounce back in the PC or other chip markets. "What we're seeing is pretty much a seasonal Q4," he said.
The commercial sector was not a major contributor to the better than expected performance, said Bryant. "The fourth quarter is usually more consumer driven, and that's the way it feels right now."
He added that most of the improvement came from business in Asia, both from end user consumption and from re-export.
Intel's statement came just hours after CPU rival Advanced Micro Devices also raised its outlook for the fourth quarter. The figures may provide some hope that after two years of gloom, the PC market is at least not going to get any worse.
Vendors appear to have experienced a relatively good start to the crucial holiday buying in the US. Bryant said yesterday that the indications were that Thanksgiving had been good, and "there's been sell through."
Earlier in the week, Hewlett Packard chairman and CEO Carly Fiorina told an analysts conference that Thanksgiving had been good, but cautioned that the holiday had fallen late this year, meaning the remaining selling period before Christmas was shorter than usual.
Yesterday's announcement by Intel was not entirely positive news. The company said it expected losses from equity investments, interest and other to be $90m, compared to its earlier forecast of $50m. It put this down to higher than expected impairment charges on equity investments.