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Intel earnings up in Q3, uncertainty clouds Q4

Pleasure spiked with pain, Atom is an aeroplane

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In uncertain economic times, techies look to big names like Intel as financial bellwethers for the industry. So it's welcome news that Intel's earnings were up during the third quarter 2008. The chip maker's outlook for Q4, however, is somewhat of a craps shoot.

Chipzilla's net income for Q3 was $2bn, up from $1.8bn in the same period last year. Operating income during the quarter was $3.1bn.

Revenue was $10.2bn, a 1 per cent rise year-over-year. Intel said it was the best third-quarter in terms of revenue in the company's history.

About $200m of those revenues was from Intel's Atom microprocessors and chipsets for low-cost netbooks and PCs. The quarter was the first full period with Atom sales included.

Because of the cheaper kit, Intel said its total microprocessor average selling price (ASP) was lower sequentially. Excluding Atom chips, the ASP was flat.

"The whole point of Atom is to set new price points," Intel CEO Paul Otellini said during today's earning call. He added that from a product margin perspective, Atom's profits are similar to what the company sees from its Celeron line.

For Q4 guidance, Intel offered a much wider margin for expected revenues than usual. The company said it sees "mixed signs" for the quarter. Corporate spending is being rationed and consumer traffic is light thus far, the company said, there's strong continued interest in notebooks and netbooks.

"It's clear the financial crisis is creating stress that may impact our business."

Intel said it expects Q3 revenue to be between $10.1bn and $10.9bn. Gross margins should be at 59 per cent, plus or minus a few points. The company also expects charges of about $250m driven by the decision by Intel and Micron to discontinue the supply of NAND flash memory coming from its jointly-operated 200nm facility in Boise, Idaho. ®

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