Intel predicts 3rd-quarter sales will fall within its predictions

A sign that chip market isn't getting worse

September 07, 2001|By BLOOMBERG NEWS

SANTA CLARA, Calif. - Intel Corp., the biggest chipmaker, said yesterday that third-quarter sales will be within the range of its earlier forecast, a sign that personal-computer demand and chip prices aren't falling more than expected.

Revenue will be slightly below the midpoint of the range given earlier, Intel said. The company said in July that sales would be $6.2 billion to $6.8 billion. Analysts polled by Thomson Financial/First Call on average expected sales of $6.41 billion.

Some investors and analysts had predicted that Intel would trim its forecast, and the company's shares rose 59 cents to $26.69 after the announcement on optimism that chip sales may recover in the next few months.

"It's very good," said Rose Papp, a fund manager at L. Roy Papp & Associates. "There is room for optimism going forward. Hopefully, September comes in reasonably well, and then they're on track to do a good fourth quarter."

Intel shares had fallen $1.37 to $26.10 in regular U.S. trading before the report. They have lost 60 percent of their value in the past year.

Analysts expect third-quarter profit of 10 cents a share, the average estimate in a Thomson Financial/First Call survey. In the year-ago period, Santa Clara, Calif.-based Intel had net income of 36 cents on sales of $8.73 billion.

"It wasn't as bad as some people thought it might be," said Graham Tanaka, whose Tanaka Capital owns the stock. "I say that with a great sense of relief - a lot of people were expecting more toward the lower end of the range."

The microprocessor business is showing normal seasonal growth in units shipped, Chief Financial Officer Andy Bryant said on a conference call. Flash-memory and communications sales are in line with expectations, little changed from the previous period, he said. He reiterated that the flash and networking units won't be profitable this quarter.

"This second quarter that we already passed was the bottom for them, and they expect to see a stronger second half," said Douglas K. Lee, a Banc of America Securities analyst.

Intel has chopped the price of its Pentium 4 PC processor by as much as 84 percent since the chip's debut in November.

Gross margin, or the percentage of sales left after subtracting manufacturing costs, is expected to be within the previous forecast and below the midpoint of the range, Intel said.

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