Intel Earnings Top Wall Street's Outlook

Oct 16, 08:06 PM

Current Headlines: By Mark Boslet, San Jose Mercury News, Calif.

Oct. 16--Intel posted strong third-quarter results on Tuesday with sales and earnings topping Wall Street's outlook.

The Santa Clara chip maker said worldwide demand for its computer microprocessors was strong during the three month period ending in September and should continue to improve in the fourth quarter.

However, Intel's gross margin of 52.4 percent was on the low end of the quarterly outlook that the company provided in September. Still, the chip maker projected a sharp increase in its gross margin for the fourth quarter, with the measure of profitability rising to "57 percent plus or minus a couple of points."

Analysts said the favorable results reflected a resilient personal computer market, especially for notebook computers.

For the quarter, Intel said sales rose 15 percent to $10.1 billion and net income increased 43 percent to $1.9 billion, or 31 cents a share. Wall Street analysts had been looking for $9.62 billion in sales and earnings of 30 cents.

In the fourth quarter, the company anticipates revenue of $10.5 billion to $11.1 billion, above the $10.42 billion analysts had been projecting. Intel also raised its gross margin outlook for the full year to 52 percent, plus or minus a point, from the 51 percent, plus or minus a few points, that it had forecast in July.

For the third quarter, the company said the average selling price of its microprocessors was flat, suggesting that the price war with rival Advanced Micro Devices had subsided. AMD reports its quarterly earnings after market close on Thursday.

Intel shares rose $1.36, or 5 percent, in late trading to $26.84.

Contact Mark Boslet at mboslet@mercurynews.com or (408) 920-5425.

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