Intel Corp and Advanced Micro Devices Inc, the biggest makers of personal-computer processors, raised their fourth-quarter sales targets on a surge of holiday buying.
The shares of both companies jumped on the news. Intel said revenue will be US$6.7 billion to US$6.9 billion, compared with an October estimate of US$6.2 billion to US$6.8 billion. Rival Advanced Micro said sales will climb at least 10 percent from the third quarter's US$765.9 million, beating analysts' highest forecasts.
PC sales so far this holiday season are shaping up better than expected, analysts and executives said. That means manufacturers are stocking up on processors from Intel and Advanced Micro, which together control 99 percent of the market. The forecasts cheered investors, who said they may signal a rebound in sales of PCs and devices after a yearlong slump.
"This is the beginning sign of a turn in the business that could continue, barring other unforeseen risks," said Graham Tanaka, whose Tanaka Capital Management owns more than 100,000 Intel shares and has US$160 million under management.
Advanced Micro shares gained as much as 11 percent to US$18 after the report. The stock added US$0.01 to US$16.25 in regular trading and has more than doubled since Oct. 1.
Intel rose as high as US$35.18 after the release.
The shares fell US$0.45 to US$34.16 in regular US trading today before the announcement and have gained 71 percent since Oct. 1.
Demand for Intel's computer chips is better than expected and sales of communications products such as flash-memory chips and networking devices are meeting targets, Intel Chief Financial Officer Andy Bryant said on a conference call.
"It is a classic seasonal fourth quarter after the year we've had," Bryant said.
Pentium 4 demand is outstripping supply and sales for both consumer and business computers is "up some," he said. The improving sales are boosting the profitability of Intel's plants.
Gross margin, or the percent of sales left after subtracting manufacturing costs, will be above the midpoint of previous targets, about 47 percent, Bryant said.
The company, based in Santa Clara, California, was expected to earn US$0.10 a share, before some expenses, on sales of US$6.59 billion, the average analyst estimates in a Thomson Financial/First Call poll.
A year earlier, Intel had net income of US$2.19 billion, or US$0.32 a share, on US$8.7 billion in sales.
Sales of Advanced Micro's new Athlon XP processor, introduced on Oct. 9, have been robust, the company said. The money-losing chipmaker still expects to return to profitability in next year's second quarter.
Advanced Micro expects a smaller operating loss this period than the third quarter's US$135.4 million, spokesman John Greenagel said. The company will top its record of 7.8 million processors shipped set last quarter, he said.
That means the chipmaker probably isn't losing market share to Intel and may be a sign that the chip industry will recover soon, investors said. Industrywide sales will slump 35 percent this year, the worst depression ever, analysts have said.
"One could have concluded that Intel was taking market share from AMD, so the fact the AMD is upping their numbers too suggests it is an industrywide phenomenon," Tanaka said.
Advanced Micro, based in Sunnyvale, California, was expected to have a loss of US$0.27 a share on sales of US$768 million in the quarter, according to First Call.
RSS