Intel Corp’s third-quarter numbers show the company is getting better at doing more with less in the toughest stretch for the personal computer industry in nearly a decade.
The world’s No. 1 microprocessor maker said on Tuesday that profit and sales both fell 8 percent in the July to September period, as the company was hurt by sluggish demand from businesses and lower prices for its chips. Intel has insisted things are improving, however, and offered better-than-expected guidance for the fourth quarter, sending its shares up nearly 5 percent.
As the first major technology company to report third-quarter earnings, Intel’s numbers will lend insight into the strength or weakness of PC makers’ demand for new chips. What the figures don’t show, though, is whether PC companies are stocking up on chips to replenish low supplies, or whether they expect especially brisk sales of computers to consumers and businesses. That will begin to play out in the coming weeks, as the holiday season gets under way with a new edition of Windows available on Oct. 22.
Intel said after the market closed that its net income was US$1.9 billion, or US$0.33 per share. Analysts expected US$0.28 per share, a poll by Thomson Reuters showed. Last year, Intel’s profit was US$2.0 billion, or US$0.35 a share, in the year-ago period.
Sales were US$9.4 billion, better than Wall Street’s forecast of US$9.0 billion.
Intel had bumped up Wall Street’s expectations twice. The first time was in August, when it raised its guidance, and the second was last month, when its CEO Paul Otellini predicted that PC sales could defy predictions by growing this year, which would avert the first year-over-year sales decline since 2001.
Still, the company’s latest numbers show the recession continues to take a toll, even as Intel gets more skillful at wringing more out of its business.
The company’s gross profit margin was 57.6 percent of revenue.
Its previous forecast was for 51 percent to 55 percent of revenue, and in the last quarter the figure was 50.8 percent of revenue.
Gross margin is especially important for a manufacturing-intensive company such as Intel because it measures how well a company is controlling its costs. Making computer chips can be prohibitively expensive.
For the fourth quarter, Intel forecast sales of US$10.1 billion, plus or minus US$400 million. Analysts expected US$9.5 billion.
Intel shares jumped US$0.96, 4.7 percent, to US$21.45 in extended trading. Before the earnings report the stock had closed at US$20.49, up US$0.09 on the day.
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