SAN FRANCISOBuoyed by growth in revenue from microprocessors and chip sets for mobile computing, Intel Corp. Tuesday (Oct. 14) posted a third-quarter profit of $2 billion, an increase of 26 percent sequentially and 12 percent year-over-year.
Third quarter earnings per share (EPS) came in at 35 cents, besting consensus analyst expectations of 34 cents. EPS was up 25 percent sequentially and 17 percent year-over-year. Intel posted a third quarter operating income of $3.1 billion, up 37 percent sequentially and 44 percent year-over-year.
Intel posted third quarter revenue of $10.2 billion, in line with consensus analyst expectations and coming in at the low end of its own guidance.
Looking ahead, the world's No. 1 semiconductor company acknowledged uncertainty for the current quarter in light of the current financial crisis. The company gave a broader-than-usual range for revenue guidance, $10.1 billion to $10.9 billion, and promised to provide a mid-quarter update on Nov. 4. Analysts had been expecting a higher fourth quarter revenue range of $10.4 billion to $11.18 billion, according to Reuters Estimates.
In an analyst conference call following the earnings announcement, Paul Otellini, Intel president and CEO, said the financial crisis is creating some signs of stress on Intel's business, but that the impact is difficult to quantity. Intel saw steady demand throughout the third quarter and "business has been good" thus far in the fourth quarter despite some softness from enterprise customers, Otellini said. But while some customers and sales channels are clearly worried, others are reporting little to no impact, Otellini said.
Intel guided for a fourth quarter gross margin of 59 percent, plus or minus a couple of points.
"The fact that the margin range remains tight and narrow tells us they are prepared to meet a number of scenarios," said Leslie Fiering, an analyst with Gartner Inc. "There is obviously a lot of variation about what their customers think is going to happen which adds to the uncertainty."
Intel executives said the company is well positioned despite the economic uncertainty, touting the company's healthy balance sheet and efforts to cut costs over the past two years. Otellini noted that the company's total headcount is down about 20,000 from its peak in 2006, thanks to a restructuring and layoff announced late that year.