Intel Sees Upbeat Results for Quarter

Intel on Tuesday reported a 20 percent year-over-year growth in revenue for its fiscal third quarter. However, executives said it has yet to see any increase in IT spending.

Intel Corp. reported a 20 percent year-over-year growth in revenue for its fiscal third quarter, led by record shipments of microprocessors and chipsets.

On Tuesday, Intel announced third-quarter net income of $1.7 billion on revenue of $7.8 billion, an increase of 20 percent and 142 percent above year-ago period. The chip giants net income and revenue also climbed 15 percent and 79 percent, respectively, fueling the belief that the technology industry may be pulling out of its three-year doldrums.

Intels third-quarter growth in revenues was the highest in 25 years, according to Andy Bryant, Intels chief financial officer, in a conference call with Wall Street analysts Tuesday afternoon. "As business improved we exited the downturn in better financial shape then when we entered," Bryant said.

In what analysts called an unusual move, Intel executives broke out the growth rates for many of its individual product segments.

Bryant ran down a long list of accomplishments:

  • Intels core Intel Architecture business grew by 17 percent.
  • Shipments in desktop, mobile, and server processors and chipsets grew by double-digit figures both sequentially and year-over-year.
  • Mobile shipments nearly doubled compared to the third quarter, while shipments of Xeons grew by 20 percent.
  • Sales of 802.11 silicon exceeded expectations, and over 50 percent of Intels wireless chip sales were as a part of the "Centrino" platform.
  • The third quarter was also the strongest ever for the Itanium processor.

However, sales in Intels wireless group fell, indicative of the "deep hole" that Intel is climbing out of in communications, Bryant said. Intel lost market share in communications during the quarter, according to the companys own data.

In addition, North American sales grew by 11 percent, and Bryant noted there was no evidence that U.S. IT departments were increasing their purchasing budgets.

Overall, Bryant said that the average selling prices of Intels processors grew slightly, enough to be noticeable but not affect the companys margins.

Worldwide, the Japanese market led the pack. Sales in Japan increased by 73 percent, driven by sales of notebooks and camera phones.

However, Intel executives left one key question largely unanswered: when to expect Prescott and Dothan, Intels first 90-nanometer chips for the desktop and mobile markets. Analysts pressed Bryant about industry buzz that the company has had problems with its 90nm process. To date, Intel has said only that it will produce "revenue shipments" of the two chips during the fourth quarter.

"Im not going to dissect the [90nm] process on this call; the process is very healthy," said Paul Otellini, Intels president, on the conference call.

However, Otellini added, Intel has made some adjustments, advising OEMs that the chips will generate more heat than originally expected. The company did so to allow it to ramp the Prescott to faster speeds over its expected lifetime, he said.

"We ended up changing the thermal target for systems for Prescott as we got silicon out ... and that required us to change the thermal envelope for system models slightly," Otellini said.

Editors note: This story has been updated since its original posting to include details and discussion from Intels conference call with analysts Tuesday afternoon.

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