Friday, May 24, 2024

Intel Issues Murky Growth Outlook

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Intel put in a strong showing for the third quarter, but due to uncertainty going forward, issued one of the widest ranges of revenue guidance in its history.

The chip giant on Tuesday said it expected revenue to be between $10.1 billion and $10.9 billion in the fourth quarter. Wall Street was expecting around $10.8 billion.

“As we look to Q4, it is hard to know what impact the financial crisis
will have on end customer demand,” CEO Paul Otellini said in a statement accompanying his company’s third-quarter earnings.

Intel reported third quarter net income of $2 billion, or 35 cents a share, compared with $1.8 billion, or 30 cents a share, in the same period last year. Revenue was $10.22 billion, up slightly from the $10.1 billion reported in the third quarter of 2007.

Analysts had expected, on average, earnings of 34 cents a share on
revenue of $10.25 billion.

However, Intel (NASDAQ: INTC) could not make many promises going forward.
So much so, it will hold a mid-quarter call to update the financial
community on whether or not it will wind up with a lump of coal in its
stocking for Christmas.

Memory is becoming a real headache for Intel. The company was hit
with a greater-than-expected charge of $265 million in the third quarter for
Numonyx, its joint-venture with ST Microelectronics to produce NOR flash
memory chips.

In Q4, Intel will take a restructuring charge of $250 million
dollars from the closure of a NAND flash memory joint venture with Micron.
Also, a Singapore memory facility is now on hold.

R&D expenses dip

Expenses will be $2.9 billion, but research and development costs will
dip by $200 million, according to Stacy Smith, chief financial officer of
the company.

“While the economic outlook has deteriorated over the past quarter, our
competitive position has improved,” he told a conference call of financial

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