Intel cites economic 'momentum,' posts strong Q3

Revenue dipped from the same period last year, but beat analyst forecasts and exceeded last quarter's figure

Intel on Tuesday reported strong third-quarter earnings that beat analyst expectations and were buoyed by what the company called "momentum" in the economy.

The chip maker reported third-quarter revenue of US$9.39 billion for the quarter that ended Sept. 26, beating the $9.04 billion estimated by analysts polled by Thomson Reuters. Revenue was up by $1.4 billion compared to this fiscal year's second quarter, though it was lower than the $10.2 billion Intel reported in the third quarter last year.

For the most recent quarter, Intel reported net income of $1.9 billion and diluted earnings per share of $0.33, beating analyst expectations of earnings per share of $0.28. Net income, however, fell from the $2.01 billion it reported in the same period last year. The company took $63 million in restructuring and asset charges for this fiscal third quarter.

A number of Intel business units -- including the mobility and digital enterprise groups -- saw revenue grow sequentially. Revenue generated from the Atom microprocessor also increased sequentially.

The strong quarterly results "underscore that computing is essential to people's lives, proving the importance of technology innovation in leading an economic recovery," said Paul Otellini, Intel president and CEO, in a statement.

The company is confident about its business prospects, he said. Intel projected fourth-quarter revenue of $10.1 billion "plus or minus $400 million." Analysts are projecting Intel's revenue to be $9.5 billion in the fourth quarter.

Intel is set to ship new laptop and desktop chips based on the advanced 32-nanometer manufacturing process starting in the fourth quarter. It will also bring new server and netbook chips in the first half of next year. The company currently manufactures chips using the 45-nm process.

Chip shipments are stabilizing as PC shipments start to rise, Otellini said during a keynote speech at the Intel Developer Forum trade show last month in San Francisco. Intel is benefitting from signs that the PC industry is coming out of what Otellini described as the most damaging recession in close to 70 years.

"What we've seen is that the notebook market is alive and well," Otellini said during a conference call to discuss the financial results. He said the PC market would record either flat sales or year-over-year growth in the fourth calendar quarter.

Intel's chip and chipset shipments recorded their largest sequential increase in more than 30 years during the quarter just ended, Stacy Smith, Intel's CFO, said during the call. Consumer demand for PCs stabilized and laptop demand was especially strong. Intel's mobility group, responsible for mobile chips, saw a 19 percent sequential increase in revenue, Smith said.

According to iSuppli's preliminary estimates Tuesday, global PC shipments totaled 73.8 million units in the third quarter, up 9.8 percent from 67.2 million in the second quarter this year. However, shipments declined by 6.7 percent compared to the same quarter last year. Intel chips go into the majority of those consumer PCs.

Enterprise spending was weak, Otellini said on the call, with companies shutting down spending on client hardware. Businesses haven't refreshed their PCs in four to five years now and older PCs cost more to maintain, according to Otellini. A refresh cycle could come next year, he said.

Microsoft's upcoming Windows 7 OS could also be a reason to buy new PCs, though that could take time, Otellini said. Corporations need a qualification period to adopt the new OS in their environment. The evaluation could happen this year with system purchases beginning in 2010, Otellini said.

Spending on servers fared better, with companies looking to swap out older servers for better-performing systems. Shipments of Nehalem-based chips were strong in data centers as companies looked to consolidate servers and cut energy costs, Otellini said. Nehalem chips could be a profit driver for Intel as companies open up their wallets to upgrade hardware, Otellini said. Revenue for the digital enterprise group -- responsible for server and desktop chips -- grew by about 14 percent sequentially.

The company's next major server chip, the eight-core Nehalem-EX, will ship by the end of this year, Otellini said. The chip could help Intel encroach on the fault-tolerant server market, against chips including its own Itanium, Sun Sparc and IBM Power. Margins in this area are good but the "bad part" is that volumes tend to be lower, Otellini said.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?