Intel Was 'Uncommonly' Bullish For 3Q, Say Analysts
By DONNA FUSCALDO
NEW YORK -- Although analysts saw no surprises in Intel Corp.'s (INTC) second-quarter earnings, they did say the No. 1 chipmaker was uncommonly bullish in its outlook for the third quarter.
As reported, Intel forecasted revenue in the third quarter will be higher than second-quarter revenue of $8.3 billion and said margins will be 63% or 64%. Intel also said backlog in the third quarter will be much more front-end-loaded.
For Intel to be as bold as it was on the conference call is a "little uncommon," said Mark Edelstone, managing director at Morgan Stanley Dean Witter.
It clearly shows Intel's confidence level for the third quarter, Edelstone added. He said 0.18-micron process technology will lower unit costs and increase unit volume.
"Demand is strong and Intel has capacity constraints all year long even starting back to last year," he said. "To get more unit output will be a help for them." Edelstone said it was a solid second quarter for Intel which didn't pose any surprises.
Intel gave very optimistic guidance, said Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray. In the past Intel has been conservative in its official estimates, he noted.
Kumar said revenue in the third quarter will be about $9 billion, which represents 8% sequential growth from the second quarter and 23% year-over-year growth.
Intel will have as strong product cycle next year, Kumar added.
Hans Mosesmann, a managing director at Prudential Securities, said that the second quarter was "pretty clean." He said Intel hasn't been this comfortable with its outlook in a while.
The investment community isn't focusing so much on the second quarter but rather on the outlook for the second half of the year, which looks good, said Mosesmann.
He said that the upward trends in Intel's business and margins will be represented in the stock price.
-Donna Fuscaldo; Dow Jones Newswires; 201-938-5253
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