graphic
graphic  
graphic
News > Technology
graphic
Intel, AMD up sales targets
graphic December 6, 2001: 6:47 p.m. ET

Intel says sales will be higher than earlier forecasts; Athlon boosts AMD.
graphic
graphic graphic
graphic
NEW YORK (CNN/Money) - Intel Corp. and Advanced Micro Devices Inc., the nation's two biggest makers of computer chips, said Thursday that sales would be a bit better than they had expected for the fourth quarter.

Intel, the No. 1 chipmaker, said demand for its PC microprocessors had been better than expected. AMD, the No. 2 maker of PC processors, said it expected higher sales in the quarter and reiterated that it expects to return to profitability in the second quarter of 2002.

Both stocks rose in after-hours trading following the news.

Intel said it now expects fourth-quarter sales of $6.7 billion to $6.9 billion, up from its previous forecast of $6.2 billion to $6.8 billion.

graphic  
Intel (INTC: Research, Estimates) typically does not provide specific earnings-per-share estimates, choosing instead to set expectations for gross margins. The most recent estimate of analysts polled by First Call is for Intel to post a fourth-quarter profit of 10 cents a share on sales of roughly $6.6 billion. That would be up from 9 cents a share earned a year earlier.

The company said its gross margin, the percentage of sales remaining after subtracting product costs, will be above the midpoint of its previous targeted range of "47 percent, plus or minus a couple of points."

Intel's new guidance was not a complete surprise. Analysts had expected the maker of 80 percent of the world's PC chips would say sales were  strong or a bit stronger than the company had expected. They noted solid sales of Intel's Pentium 4 processors.

Click here to check chip stocks

The company has substantially ramped up production of those chips in recent months and has been aggressively pricing them in a bid to stave off tough competition from AMD, which has been taking business from Intel with its Athlon line of microprocessors.

In a statement, AMD described the sales of its top-end Athlon XP chip as "robust," and said it now expects its total revenue in the fourth quarter to rise "10 percent or better" from the $765.9 million it reported in the third quarter. Previously, the company had said it expected revenue to be "flat to high single-digit percentage growth."

The fourth quarter typically is stronger for chipmakers, as sales of PCs and other electronics tend to increase during the holiday season. When they previously set expectations, executives from both companies were cautious, warning that declines in consumer spending as a result of the Sept. 11 terrorist attacks could affect the normal seasonal pattern.

In a teleconference Thursday evening, Andy Bryant, Intel's chief financial officer, said the company had underestimated this year's seasonal upturn.

"It is a classic seasonal fourth quarter," Bryant said. "The change is that we had judged down from a seasonal fourth quarter based on macroeconomic indicators. It turns out we didn't need to do that."

Bryant also said the factories that make Pentium 4 and logic chips are running close to full, helping  boost gross margins. He said there has been no unexpected costs or problems with the ramp-up of the Pentium 4 chip.

"Manufacturing is performing wonderfully right now," he said. "The manufacturing ramp up is going as expected, maybe a little bit better than expected. The factories are full. There's no question you get some benefit from that."

In fact, he said there are shortages of Pentium 4 for some customers, a condition the industry hasn't seen in quite some time.

  graphic
Although the chipmakers' comments supported some market watchers recent optimism about the pace of holiday PC sales, not all of the opinions on Wall Street have been as upbeat.

Robertson Stephens analyst Eric Rothdeutsch recently pointed out that production of motherboards -- the nerve centers of computers -- has been falling, which could be an indicator of a sharp post-holiday decline.

Intel rose to $34.90 in after-hours trading after falling 45 cents to $34.16 in the regular Nasdaq session. AMD (AMD: Research, Estimates) jumped to $17.50 after closing little changed at $16.25 in regular trading on the New York Stock Exchange. graphic





graphic graphic

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
graphic