Intel Tweaks Q2 Outlook

Chip maker says demand for its Intel Architecture business, which includes its chips, is pushing toward the high end of expectations, while demand for communications products is soft.

Intel Corp. on Thursday fine-tuned its second-quarter outlook, predicting that revenue would come in between $6.6 billion and $6.8 billion.

At its first-quarter earnings announcement in April, officials with the Santa Clara, Calif., chip maker estimated revenues for the current quarter would come in at between $6.4 billion and $7 billion.

The current quarter ends June 28.

For the second quarter last year, Intel reported a disappointing $6.3 billion in revenue amid a slowing demand for processors and announced 4,000 job cuts.

In a release issued Thursday afternoon, the company said that demand for its Intel Architecture business—including PC processors—is pushing toward the high end of expectations, while demand for communications products is soft.

In a conference call with analysts, Chief Financial Officer Andy Bryant said the quarter is rolling out as company officials expected.

"Almost every element is coming out as expected," Bryant said.

He said the rollout and adoption of Centrino, the companys mobile technology platform, and two new PC chip sets, the 865 and 875, are on target, and that the SARS epidemic in Asia is not hurting business more than expected.

"I think SARS was recognized as a potential big event in April," Bryant said. "We took our best estimate on what its effect would be, and we apparently were on target."

The softness in the communications area is in large part due to flash memory sales. Bryant said the company is still suffering from its first-quarter push to up prices in flash memory, which has led some customers to buy elsewhere.

"Were trying to re-earn orders from our customers," he said. "We stubbed our toe at the beginning of the year with the pricing situation."

Bryant also said the company is continuing to try to control inventory as it prepares to begin production on processors built on 0.09-micron process later this year. The next generation of the Pentium chip, code-named Prescott, will be built on the process.