Update: Intel cites economic 'momentum,' posts strong Q3

IDG News Service - Intel on Tuesday reported strong third-quarter earnings that beat analyst expectations and were buoyed by what the company called "momentum" in the economy.

The chip maker reported third-quarter revenue of $9.39 billion for the quarter that ended Sept. 26, beating the $9.04 billion estimated by analysts polled by Thomson Reuters. Revenue was up by $1.4 billion compared to this fiscal year's second quarter, though it was lower than the $10.2 billion Intel reported in the third quarter last year.

For the most recent quarter, Intel reported net income of $1.9 billion and diluted earnings per share of 33 cents, beating analyst expectations of earnings per share of 28 cents. Net income, however, fell from the $2.01 billion it reported in the same period last year. The company took $63 million in restructuring and asset charges for this fiscal third quarter.

A number of Intel business units -- including the mobility and digital enterprise groups -- saw revenue grow sequentially. Revenue generated from the Atom microprocessor also increased sequentially.

The strong quarterly results "underscore that computing is essential to people's lives, proving the importance of technology innovation in leading an economic recovery," said Paul Otellini, Intel president and CEO, in a statement.

The company is confident about its business prospects, he said. Intel projected fourth-quarter revenue of $10.1 billion "plus or minus $400 million." Analysts are projecting Intel's revenue to be $9.5 billion in the fourth quarter.

Intel is set to ship new laptop and desktop chips based on the advanced 32-nanometer manufacturing process starting in the fourth quarter. It will also bring new server and netbook chips in the first half of next year. The company currently manufactures chips using the 45-nm process.

Chip shipments are stabilizing as PC shipments start to rise, Otellini said during a keynote speech at the Intel Developer Forum trade show last month in San Francisco. Intel is benefitting from signs that the PC industry is coming out of what Otellini described as the most damaging recession in close to 70 years.

"What we've seen is that the notebook market is alive and well," Otellini said during a conference call to discuss the financial results. He said the PC market would record either flat sales or year-over-year growth in the fourth calendar quarter.

Intel's chip and chipset shipments recorded their largest sequential increase in more than 30 years during the quarter just ended, Stacy Smith, Intel's CFO, said during the call. Consumer demand for PCs stabilized and laptop demand was especially strong. Intel's mobility group, responsible for mobile chips, saw a 19% sequential increase in revenue, Smith said.