Intel Earnings Rise, But PC Demand Is Lower Than Expected - InformationWeek

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10/12/2004
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Intel Earnings Rise, But PC Demand Is Lower Than Expected

Microprocessor giant Intel slightly exceeded the lowered third-quarter expectations it had set for itself last month. But growth was inhibited by inventory adjustments at some major customers and lower than expected PC demand.

Intel Corp. slightly exceeded the lowered expectations it had set for itself last month, when it announced third-quarter revenues on Tuesday of $8.5 billion, and earnings of 30 cents a share.

Growth in the quarter ended Sept. 25 was driven by record sales of server and mobile microprocessors, and gains in flash memory, said Intel CEO Craig Barrett in a statement.

"Growth was not as high as we originally expected due to inventory adjustments at some of our major customers and lower than expected overall demand for PCs," he said.

Despite the slowness, revenue was up 5% sequentially and 8% year over year.

Demand for microprocessors was lower than anticipated in normal seasonal patterns, but revenue was higher in such lower margin areas as chipsets, motherboards and communications products, said Paul Otellini, president and chief operating officer.

"Although growth in the quarter wasn't as high as we expected in July, we had a number of bright spots," he said.

For the third quarter, Intel reported net income of $1.9 billion, or 30 cents a share, on revenue of $8.5 billion, compared to net income of $1.7 billion, or 25 cents per share, on revenue of $7.8 billion in the same quarter a year ago.

Year to date, Intel has reported net income of $5.4 billion, or 84 cents per share, on revenue of $24.6 billion, compared to net income of $3.5 billion, or 53 cents per share, on revenue of $21.4 billion during the first three quarters of 2003.

Intel said it expects fourth quarter revenue between $8.6 billion and $9.2 billion.

A bridling factor on growth of microprocessor sales in the fourth quarter will be a continued oversupply of inventory held by customers that began in the second quarter, said Andy Bryant, executive VP and chief financial and enterprise services officer.

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