Fueling optimism that the PC industry may finally be seeing signs of a recovery, the worlds top two PC chipmakers on Thursday raised revenue projections for the current quarter, citing stronger-than-expected processor sales in recent weeks.
Intel Corp. and Advanced Micro Devices Inc., in separate mid-quarter updates, said that growing demand for the companies respective high-end processors, the Pentium 4 and Athlon XP, will result in the companies posting quarterly revenues at the high-end of previous projections.
Worldwide, Intel, of Santa Clara, Calif., accounts for slightly less than 80 percent of the PC chip market, while AMD garners about 20 percent, according to Mercury Research, based in Scottsdale, Ariz.
Both chipmakers suffered significant drops in revenue this year blamed on falling sales amid an industry-wide downturn, as well as an ongoing price war that further eroded profit margins.
Executives with Intel said the company now expects fourth-quarter revenue to be between $6.7 billion and $6.9 billion, up from the previous range of $6.2 billion to $6.8 billion. Prior to the call, Wall Street analysts had been projecting revenue of about $6.58 billion, according to a survey conducted by Thomson Financial/First Call.
While Intels latest forecast would mark an increase over the companys third-quarter total of $6.5 billion, it still remains well below the $8.7 billion the company took in during the same quarter last year, and even the $8.2 billion it collected during the final three months of 1999.
For the third quarter of this year, Intel reported earnings of $106 million, or 2 cents a share, a 96 percent drop from a year earlier. While Intel did not predict its fourth-quarter income, analysts expect the chipmaker to earn about 10 cents per share during the period, according to Thomson Financial/First Call.
AMD, based in Sunnyvale, Calif., reported that it now expects fourth-quarter sales to be about 10 percent higher than its third-quarter revenue of $765.9 million. Previously, the company had projected fourth-quarter revenues would be flat or up by a high single-digit percentage.
Despite the higher revenue projection, AMD said it still expects to post a loss for the quarter, although it contends it will be significantly less than the $186.9 million it lost during the last earnings period.
Overall, AMDs forecasted revenue will still come in well below the $1.18 billion it posted during the same period last year, highlighting the fact that while AMD is selling its processors in record numbers, its ongoing price war with Intel continues to undermine profits.
While the chipmaker said its on track to sell a record number of its Athlon XP, Athlon and Duron processors this quarter, the company admitted that its flash memory business remains weak, with sales predicted to be "no better than flat" for the three-month period.