October 13th, 2009
Intel's third quarter powered by inventory builds, back-to-school demand; Outlook bright
Updated: Intel’s third quarter earnings and revenue handily topped estimates and the company said it was “confident about our business prospects going forward.” Intel added that its fourth quarter revenue would come in ahead of projections.
Specifically, Intel on Tuesday reported net income of $1.9 billion, or 33 cents a share, on sales of $9.4 billion, down from $10.2 billion in the same quarter a year ago. Wall Street was looking for earnings of 28 cents on revenue of $9.06 billion.
As for the outlook, Intel projected fourth quarter revenue of $10.1 billion, give or take $400 million. Wall Street was expecting Intel to deliver fourth quarter sales of $9.52 billion. Intel also projected fourth quarter gross margins of 62 percent, ahead of the 56.86 percent estimate.
In a statement, Intel CEO Paul Otellini said that the company has strong momentum. “This momentum in the current economic climate, plus our product leadership, gives us confident about our business prospects going forward,” said Otellini.
In prepared remarks ahead of the company’s conference call, Intel CFO Stacy Smith said back-to-school sales and inventory builds ahead of a seasonally strong fourth quarter contributed to results. Revenue from the Atom processor was “better than seasonal patterns on higher volume and slightly lower average selling prices.”
Indeed, Intel is faring well in the downturn. The company said it delivered record chip and chipset units, gross margins of 57.6 percent (estimate: 54.7 percent), and inventories that were down $315 million from the second quarter. Meanwhile, all of Intel’s units showed sequential improvement.
One nit: Intel’s average selling prices for chips were “slightly down” sequentially.
updated: During a conference cal with analysts, Otellini said the strong quarter was the result of having “the right products at the right costs at the right times for a recovering global economy.” Specifically, he said the notebook business continued to be a “primary driver of revenue growth” and that trend is expected to continue.
As a breakout, he also noted that the business in the U.S. was largely driven by consumers and that sales during the back-to-school season exceeded company expectations.
- Intel ended the quarter with 80,800 employees, down from 83,500 a year ago.
- 57 percent of Intel’s revenue ($5.32 billion) derived from Asia Pacific. A year ago, Intel’s Asia Pacific revenue was $5.39 billion, or 53 percent of revenue. The Americas accounted for 19 percent of third quarter revenue followed by Europe (14 percent) and Japan (10 percent).
- The company ended the quarter with total cash investments of $12.93 billion.
And Intel by the unit:
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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