Earnings: Intel

Chip giant Intel’s reported earnings yesterday gave some glimpse of hope that the economy is recovering. Used as one of the indicators for consumer demand, or more specifically as an alternative indicator to demand for personal computers where chips serve as the brain, Intel Corp. boosted its outlook for the year’s last quarter by predicting a jump in chip demand as well as its gross profit margin. That indicates the company, along with the computer makers, might see some good holiday season for 2009.

Moving on to the numbers:

  • Intel reported income of $1.86bn or 33 cents a share, which points to a massive 77% increase from its Q2 numbers.
  • Revenue, although lower on a y/y basis at $9.39bn from last year’s $10.22bn, was still 17% higher than last quarter. This was also higher than the $9.06bn expected by analysts.  Intel predicted in late August for revenue to be higher by just 6% for Q3.
  • Both the topline and the bottomline are about 8% lower than 2008’s numbers.  However, compared to the last two quarters, the decline for Q3 is much lower than the 15% and 26% seen in Q1 and Q2, respectively.
  • Meanwhile, the company’s profit margin was estimated to be in the upper half of the predicted 53% +/- 2%. Beating analysts’ expectations, profit margin came out to stand at 57.6%. The company predicts the margin would further rise to 62% for the last quarter, about 5% above expectations.
  • Intel’s Mobility Group revenue up 19 percent, Digital Enterprise Group revenue up 14 percent, and Intel Atom microprocessor and chipset revenue up 15 percent to $415 million, all sequentially.
  • Growth in demand for Intel’s chips may be helped by the release of Microsoft’s Windows 7 late this month.

“Intel’s strong third-quarter results underscore that computing is essential to people’s lives, proving the importance of technology innovation in leading an economic recovery.  This momentum in the current economic climate, plus our product leadership, gives us confidence about our business prospects going forward,” said Paul Otellini, Intel president and CEO.

See Intel’s earnings release via its website here.


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