Sat, Jun 11, 2005 - Page 10 News List

Intel raises outlook on growing demand

SEMICONDUCTORS With sales of notebook computers on the rise, the microchip giant boosted its predictions for the second quarter, capping a week of good news

AP AND NY TIMES NEWS SERVICE , SAN FRANCISCO AND SAN JOSE

Intel Corp, the largest chipmaker, on Thursday increased its revenue forecast for the second quarter because of strong sales of notebook computers that use its Centrino chip.

The company said revenue would be in the range of US$9.1 billion to US$9.3 billion for the period ending July 2, higher than the range of US$8.6 billion to US$9.2 billion it gave in April. The quarter ends July 2.

The revised estimates beat the estimates of Wall Street analysts, who were expecting sales of about US$8.99 billion, according to Thomson Financial.

Intel does not provide earnings guidance, but analysts have forecast a profit of US$0.28 a share for the second quarter. The company posted earnings of US$0.27 a share in the second quarter last year.

Before Intel released its update, shares in the firm rose US$0.60 on Thursday, to close at US$27.70, then fell slightly in after-hours trading.

Intel's revised forecast capped a week of good news for the semiconductor sector.

On Tuesday, Texas Instruments Inc raised its second-quarter earnings guidance and narrowed its revenue outlook, citing higher demand for semiconductors and educational calculators.

A day later, the Semiconductor Industry Association (SIA) boosted its forecast from flat to 6 percent growth to US$226 billion this year, pointing to stronger demand for personal computers, cellular phones, digital televisions and digital cameras.

"Our cautious forecast issued in November of 2004 was based on concerns that high energy prices and lingering excess inventories in a few segments of the industry would dampen sales in 2005," SIA president George Scalise said. "Those fears have not materialized."

Chipmakers, including Intel, did briefly suffer from excess inventory last year, but the industry quickly recovered. The amount never exceeded US$1.5 billion, Scalise said.

That compares with 2000, when semiconductor companies reported US$15 billion in excess inventory that took until 2003 to work down, he added.

On Monday Intel announced a deal with Apple Computer to provide the chips that power Macintosh computers, replacing IBM's PowerPC chips, a crucial vote of confidence for the chipmaker as it moves to put a period of technical setbacks and missed deadlines behind it.

Intel expects gross margins to be approximately 57 percent, plus or minus a point, as compared with the earlier forecast of 56 percent, plus or minus a couple of points.

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