Intel cautions on 3Q sales rebound
CEO of No. 1 chipmaker says firm is unsure if jump is due to delayed demand following SARS.
August 26, 2003: 7:37 AM EDT
PENANG, Malaysia (Reuters) - Chipmaker Intel Corp. cautioned Tuesday that its third-quarter sales rebound that has excited investors might be temporary and was not a sure sign that the sector had emerged from its three-year slump.
Intel (INTC: Research, Estimates) shares fell 24 cents to $27.00 in before-hours trading Tuesday.
"We don't know how much of this Q3 is a kickback of a SARS-related spending that didn't happen in Q2," Intel Chief Executive Craig Barrett told Reuters in an interview, referring to the outbreak of Severe Acute Respiratory Syndrome virus in East Asia this year.
Asia Pacific accounted for two-fifths of Intel's $6.8 billion revenue in the April-June quarter.
"The question whether the fourth quarter will continue off of that, based on what we said for the third quarter, we don't know yet," said Barrett, who was on Malaysia's northern Penang island to launch a new $40 million design center for Intel's local plant.
He did expect a rise in fourth-quarter PC sales due to seasonal demand, he said, but was unsure whether the traditional year-end boom would be sharper this year than in 2002.
Industry outlooks and earnings guidance from Intel, whose processors are found inside 80 percent of personal computers worldwide, are closely watched by a semiconductor market with an estimated $150 billion in annual sales.
The Santa Clara, Calif.-based firm surprised investors Friday when it raised revenue and profit margin forecasts, but declined to call a definitive recovery for the still struggling industry.
Despite the contradictory stance and analysts' cool response to its optimistic forecasts, Intel shares shot to a 14-month high Friday and lifted other technology stocks. But it lost 0.55 percent Monday versus a 0.06 drop in the Nasdaq Composite Index.
Intel expects revenue in the July-September period to rise to between $7.3 billion and $7.8 billion, up 11 percent from the second quarter. Only last month it had forecast sales of $6.9 billion to $7.5 billion.
No -64-bit rush
Barrett also said Intel was unworried by a new line of super powerful microchips due to be released by nearest rival Advanced Micro Devices Inc (AMD: Research, Estimates)., and did not plan to offer desktop equivalents to protect its market share.
There has been speculation the new AMD chips, the Opteron and Athlon 64, could pose the biggest-ever threat to Intel's popular Itanium and Pentium chips.
There were still no applications software for the Athlon 64 and an operating system promised by Microsoft would not come to market until next year, he said.
"We have no plans at this stage for a 64-bit address extension like the AMD device for the desktop," said Barrett. "AMD has embarked on a late-year company strategy. That's fine but I wouldn't trade places with them."
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