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Sat, Dec 06, 2003 - Page 12 News List

Intel narrows revenue estimate for Q4

HOLIDAY SEASON The world's largest chipmaker revised its sales figures toward the high-end of its previous forecasts, but also warned of a US$600 million write off

AP , SAN JOSE, CALIFORNIA

Buoyed by the holiday season's strong demand, Intel Corp narrowed its fourth-quarter revenue estimate toward the high end of its previous forecast. But the semiconductor giant also warned of a US$600 million charge.

Intel said Thursday it expects revenue to be between US$8.5 billion and US$8.7 billion. In October, the company predicted sales would be US$8.1 billion to US$8.7 billion. The company does not announce profit estimates.

"It's one of those quarters where you'd like to celebrate the business, and you're looking at the fact you have to write off," said Andy Bryant, Intel's chief financial officer. "It's very uncomfortable and very negative."

Analysts expect the semiconductor giant to post a profit of US$0.29 per share on sales of sales of US$8.53 billion for the three months ending Dec. 31, according to a survey by Thomson First Call. In the fourth quarter of last year, it posted sales of US$7.16 billion.

The Santa Clara, California-based company said its core microprocessor business -- the Intel Architecture Group -- is "experiencing solid seasonal growth." Meanwhile, its communications chip business is on track with expectations.

But it would take a goodwill impairment charge of about US$600 million related to its Wireless Communications and Computing Group, which makes components and software for cellular-handset makers and handheld-computer makers.

"The long-term growth expectations for this business are no longer projected to be as high as previously expected," the company said.

Rick Whittington, an analyst at American Technology Research, said Intel's strategy of selling a common hardware to cellphone makers does not seem to be paying off. Cellphone manufacturers want to differentiate their offerings, not commoditize their business, he said.

"AMD has used that as a selling technique to try to pry away some of Intel's cellphone customers, and it seems to have had an effect," he said.

Intel's microprocessor sales are not only benefiting from the overall strength of the computer market but also a shift in the popularity of notebooks, which carry a higher profit margin for the computer makers and component providers like Intel.

Intel has been heavily marketing its Centrino mobile technology brand, which includes a processor as well as a chip set and radio for wireless communications.

Before its update, Intel shares closed at US$33.54, up US$0.20, in Thursday trading on the NASDAQ Stock Market. In extended trading, they lost US$1.07, or 3 percent.

"There were some expectations -- certainly on my part, and maybe by others -- that they might raise the upper end of the revenue range," Whittington said. "They did not."

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