SANTA CLARA, Calif. -- Intel Corp. is now seeing slightly stronger growth in server microprocessor sales and lower manufacturing costs in the first quarter, but overall the company's businesses are being driven as expected by normal seasonal patterns, said the chip maker's chief financial officer in an mid-quarter update today.
No economic recovery has been detected yet by Intel in its businesses, cautioned CFO Andy Bryant, but there have been no unpleasant surprises as well, he said in a conference call with analysts.
The Santa Clara company said its microprocessor business continues to follow seasonal patterns in the first quarter, while the communications businesses remain weak.
Based on the first two months of the quarter, Intel said it expects Q1 revenues to be in a range of $6.6-to-$6.9 billion, as compared to a previous estimate of $6.4-to-$7.0 billion.
Intel also said its gross margin percentage is expected to be within the guidance issued in mid-January and "above the midpoint of the range."
On Jan. 15, Bryant told analysts that Intel expected a gross margin percentage of 50% in Q1, plus or minus a couple of points, compared to 51% in the fourth quarter. In today's conference call, Bryant said the gross margin would be above the midpoint of the previous guidance partly because of stronger-than-expected sales in server markets and improved cost savings in Intel's production plants.
However, the executive vice president also told analysts that the Intel's markets remained in a year-long slump, driven up and down by seasonal factors at lower levels of revenues than sales prior to the downturn.
"We have seen no evidence yet of an economic recovery in our business," he said, responding to questions. The chief financial officer said Intel would update the economic outlook in the next conference call, after releasing the first quarter results in April.
Only recently has Intel seen chip inventories move into a supply/demand balance, Bryant said. He told analysts that Intel's visibility was somwhat limited into "channel" inventory at customers. "You probably need to check with the customers to get the best data," he suggested. However, the CFO said he believes processor inventories were "running thinner" than they should be overall.
All other expectations in the first quarter are unchanged from the prior guidance, according to Intel.
--J. Robert Lineback