Intel Corp. Narrows 4Q Revenue Estimates, Closes down
Thursday December 4, 7:06 pm ET
By Matthew Fordahl, AP Technology Writer
Intel Narrows Fourth-Quarter Revenue Estimates Toward the High End of Its Previous Forecast
SAN JOSE, Calif. (AP) -- 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 $600 million charge.
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Intel said Thursday it expects revenue to be between $8.5 billion and $8.7 billion. In October, the company predicted sales would be $8.1 billion to $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 29 cents per share on sales of sales of $8.53 billion for the three months ending Dec. 31, according to a survey by Thomson First Call.
The Santa Clara, Calif.-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 $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 cell phone makers does not seem to be paying off. Cell phone 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 cell phone 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 $33.54, up 20 cents, in Thursday trading on the Nasdaq Stock Market. In extended-session trading, they lost $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." |
