Intel disappoints with flat revenues

No signs of a recovery here
Written by John G. Spooner, Contributor

No signs of a recovery here

Chipmaker Intel has reported third-quarter earnings that fell shy of analysts' expectations, with revenue flat year over year. The company reported a net profit of $686m, or 10 cents per share, for the quarter ending 28 September. Intel earned $106m, or two cents per share, a year ago. Excluding charges, Intel earned a pro forma profit of $768m, or 11 cents per share. Analysts were expecting the company to report a profit of 13 cents per share, according to a survey by First Call. Revenue for the quarter was flat year over year, at $6.5bn. Revenue rose three per cent, however, from the second quarter's $6.3bn. Intel met its revenue targets, hitting the midpoint of predictions given to the analyst community during the quarter. Intel cut business costs and gained market share in desktop processors during the quarter, but it's still waiting for the other shoe - the economic one - to drop. "We expect revenue in the fourth quarter to be between $6.5bn and $6.9bn," Andy Bryant, Intel's CFO, said during a conference call with analysts. That means sales will be "flat to up (by) six per cent sequentially and at the low end of seasonal patterns for the quarter". During the past few years, sales have seen growth of between about six per cent and about 13 per cent, Bryant said. The relatively dour outlook reflects Intel's thinking about the PC market and the economy in general in the United States, Europe and Japan. While Intel increased its shipments of PC processors and chipsets during the quarter, it saw shipments of notebook chips remain flat and shipments of server chips decline, Paul Otellini, Intel's president, said. Although they look good on the surface, Intel's desktop shipment increases came mainly against rival Advanced Micro Devices in the consumer market, Otellini admitted. The chipmaker is still counting on an upswing in business spending for a return to the spectacular profitability it has enjoyed in past years. Most analysts predict a gradual return in corporate spending in 2003, but the chipmaker isn't holding its breath. When it comes to notebook chips, for example, "The majority of the notebook market tends to be corporate purchases. It's really speculative at this point (to determine) when that will recover," Otellini said. Intel shares rose just over nine per cent, to $16.42, on Tuesday before the third-quarter results were announced. Following the announcement, shares fell in after-hours trading by just over $2, or 13 per cent, according to Island ECN. John G Spooner writes for News.com
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