Intel’s sales forecast tops estimates

INTEL, the world’s biggest chipmaker, last night predicted fourth-quarter sales that beat analysts’ estimates, an indication that consumer demand for computers may be reviving.

Revenue this period will be $11.4 billion (€8.2bn), plus or minus $400m, Intel said. That compares with an average projection of $11.3bn, in a Bloomberg survey.

Consumers stepped up purchases of computers in September, helping Intel bounce back from the slump that forced it to cut its third-quarter revenue forecast in August. Renewed buying was driven by price cuts and may not last through year’s end, said Tristan Gerra, an analyst at Robert W Baird & Co.

“There was a significant rebound in the PC supply chain in September and it looks like it continued in October,” said Gerra, who has a “neutral” rating on Intel shares. “We don’t believe this rebound is sustainable,” he said.

Intel gained in extended trading. Earlier, it rose 21 cents, or 1.1%, to $19.77 in Nasdaq Stock Market trading. The stock has declined 3.1% this year.

Third-quarter net income was $2.96bn, or 52c a share, against $1.86bn, or 33c, a year earlier. Analysts had estimated a 50c profit per share. Revenue rose 18% to $11.1bn, compared with a mean prediction of $11bn.

Gross margin, the only profit indicator that Intel forecasts, will be 67%, plus or minus “a couple” percentage points, this quarter.

The measure of profitability – the percentage of sales remaining after deducting production costs – was 66% in the third quarter.

In August, when Intel revised projections, it said gross margins wouldn’t reach the higher end of an earlier forecast, coming in at 66%, plus or minus a point.

That compares with a prior forecast of 67%, plus or minus “a couple” of points.

At the time, Intel said third-quarter results would be lower than previously expected, citing weaker- than-anticipated consumer demand for personal computers in mature markets.

Sales would be $11bn, plus or minus $200m, against a previously forecast range of $11.2bn to $12bn, Intel said then.

Intel, whose chips run more than 80% of the world’s personal computers, kicks off three weeks of earnings reports by the largest US tech companies, including IBM, Google. and Microsoft.