Ramsey and thread, please read this:
dailynews.yahoo.com.
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Intel Sees Stronger-Than-Expected Fourth Quarter
By Duncan Martell
SAN FRANCISCO (Reuters) - Intel Corp. (Nasdaq:INTC - news)
said Tuesday strong demand would drive its fourth-quarter
revenue higher than expected -- the second quarter in a row the
world's largest computer chipmaker has said results will beat Wall
Street expectations.
In putting together two better-than-expected quarters, Intel is
showing that even with 80 percent of the market for the brains of
PCs, it can still produce higher revenues and earnings. The
company said
revenue will be 8 percent to 10 percent higher than the third
quarter's $6.7 billion.
Gross margin, or percentage of revenue minus product costs, will
surge a whopping two percentage points above the 53 percent in
the prior quarter.
The company is having great success, analysts said, with its
Celeron chip designed for low-cost PCs as well as with its Xeon
chip, designed for heavy-duty computing.
''I'm pretty impressed,'' said Richard Slinn, a money manager at
San Francisco-based Levensohn Capital Management. ''This is a
company with a lot of operating leverage when times are good.''
And times seem to be much better than the first half of the year
when Intel and personal computer makers were hurt by a glut of
PCs on dealers' shelves.
The industry is gearing up for the holiday shopping season -- its
strongest period of the year -- and companies are snapping up new
models that just came out in August. Moreover, contrary to popular
opinion, there is good growth in higher-end PCs that have faster
chips, more memory and better performance.
''Demand for PCs above the $1,000 level is pretty strong,'' Slinn
said. ''Customers aren't just buying the cheapest of the cheap.''
Intel's news follows bullish comments made by Paul Otellini, head
of Intel's business architecture group, during a speech at Oracle
Corp. (Nasdaq:ORCL - news)'s OpenWorld conference in San
Francisco.
He said there was strong demand for the Celeron chip and that
Intel expected to double unit shipments of the Celeron chip in the
fourth quarter from the third.
That would be up from the three million to four million Celeron
chips Intel shipped in the third quarter, estimated Bill Milton, an
analyst at Brown Brothers Harriman & Co.
Otellini's speech also underscored Intel's aggressive push to sell
more of its top-of-the-line Xeon chips into the high-end computing
market.
Those processors, which now run as fast as 450 megahertz and are
expected to reach speeds of more than 600 megahertz by the
second half of next year, are the brains of powerful server
computers that manage and process data on corporate networks.
''Xeon shows Intel's move into the high end,'' Milton said. ''Xeon is
quite competitive'' with other chips that run server computers using
the Unix operating system, which powers the most sophisticated
machines.
In his speech to thousands of information technology professionals,
Otellini said Xeon chip sales were growing 1.5 times faster than
those of non-Intel architecture chips.
''The foundation of the new computing industry is quite clearly
moving to Intel,'' Otellini said.
In an interview after his speech, Otellini said the Santa Clara,
Calif.-based chipmaker was no longer having trouble meeting
demand for Xeon, as it was in the third quarter.
''We're no longer supply-constrained,'' Otellini told Reuters. ''How
many thousands would you like
to buy?''
Intel reported stronger-than-expected earnings for the third quarter,
citing growth in nearly all its product lines and strong seasonal
demand for PCs.
The same appears to be happening this quarter.
''Japan is kind of picking up,'' Otellini said. ''We're getting some
sequential growth again, which feels good.''
Japan is mired in its first recession in years, and PC growth there
has slowed precipitously. Asia, including Japan, accounts for
about 25 percent of the world's PC sales.
''Unit shipments to China and India are holding at their current
growth level,'' Otellini said.
While Japan, Thailand and Malaysia have seen demand wane,
sales in China and India have remained the fastest-growing for
Intel in the Asia region.
''All segments of the PC market are doing pretty well right now,''
Milton said.
In after-hours trading, Intel stock was up $1.81 after gaining $1.56
to close at $97.56 on the Nasdaq during regular hours. Intel
disclosed the news after the close of trading.
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Intel's momentum right now looks to be able to carry them through 1Q99 and who knows how many quarters after that. Otellini, the Intel VP speaking, is more bullish in this article than I've ever seen an Intel exec. They are usually conservative to a fault. To me, the next tough time for Intel, relatively speaking because they don't ever really have tough times, may be with the introduction of Merced. This is because a major product transition is never easy and usually tests revenues and profits. Merced is slated for year 2000 production, so, at this point, I don't see worrying about Intel's results very much at all until then.
Sorry if I took too many cycles writing about a company other than AMAT. OTOH, as you guys know, what's good for you know who, is also good for you know whom. Speaking of which, those 600 MHz chips coming off the line in 2H99 will be 0.18 micron. AMAT might just be getting some better than expected equipment business from Intel, and sooner.
Tony |
