Forecast Is Key
Although Intel may offer good quarterly numbers, analysts will look at the company's forecast for the fourth quarter of this year and then into 2009 to see if there are any hints about buying patterns and demand for IT hardware. Intel will likely not offer many specifics but offer a more general guideline, which could at least offer a model of what their customers are buying and how much demand there is for Intel processors. "People are going to pay attention to the forecast," said John Spooner, an analyst at Technology Business Research. "Intel will probably try and limit the amount of discussion on 2009 and try to focus on the fourth quarter...they [Intel] will probably temper everything by saying things are very uncertain now. Intel is going to talk about baseline demand and what they are seeing in the market right now and they will then base whatever projections they have off of that."Analysts are looking for Intel to post earnings of 34 cents per share with revenue of $10.27 billion. In the third quarter of 2007, Intel posted earnings of 31 cents with revenue of $10.09 billion. While Intel is a reliable bellwether to determine what businesses are spending or will spend on IT equipment, AMD is more reliant on consumer spending, especially when it comes to sales of desktops. AMD has suffered through seven straight quarterly losses at this point. Analysts are also expecting the company to sustain another financial loss this quarter. Estimates are calling for AMD to lose 40 cents a share with revenue of $1.4 billion. A year ago, AMD posted a loss of 49 cents a share with revenue of $1.6 billion. In the week leading up to its financial statement, AMD also made a major announcement this week that it will spin off its manufacturing facility into a new company and it will receive an infusion of cash while pushing some of its debt off to the new company. While this is an important step for AMD to recover from its debt, it's not likely to impact its third-quarter results. What is more important for AMD, and for the IT industry, is sales and shipments of its quad-core Opteron processor for high-end systems as well as sales of tri- and quad-core Phenom chips for desktops. Analysts will also see how the company's Radeon graphics sold during the quarter since the third quarter is typically the best time of year for graphics card sales.
If Intel does begin to see its sales slow down, the company could then turn around and cut chip prices, which could then help push more of its inventory out the door. It also is likely that Intel will not cut back on its research and development spending since new technology and innovations keep the company moving forward.