SANTA CLARA, Calif.--Intel Corp. today raised its estimate for fourth-quarter revenues to a range of $6.7-to-$6.9 billion, which would give the chip giant a sequential increase of 3-to-6% over $6.5 billion in Q3. Intel said it was increasing its forecast from a previous guidance of $6.2-to-$6.8 billion because better-than-expected demand for microprocessors.
During a conference call with analysts, Intel's chief financial officer said the revision is a result of seasonal growth patterns taking hold in key chip markets and economic conditions not undermining those sales as much as previously expected.
"What I'm trying to communicate in explaining the revised forecast is that we had 'judged down' a seasonal fourth quarter, based on macro-economic indicators. It turned out that we did not need to do that," explained Andy Bryant, executive vice president and CFO at Intel. "The seasonal pattern has asserted itself."
While Intel's processor business is doing better than predicted in the fourth quarter, the company's memory and communications chip businesses "are pretty much doing as expected going into the quarter," Bryant told analysts.
Many Wall Street analysts had been expecting Intel to raise its revenue forecast because some IC markets have begun to stabilize with several key chip segments now showing modest sequential growth since September.
Bryant confirmed industry reports of shortages in Intel's Pentium 4. The company expects to double production of its new processor in the fourth quarter from Q3 volumes, but Intel's logic capacity is now nearly full, according to the CFO.
"We did spend $7.5 billion in capital this year," Bryant said. "That equipment is targeted towards 300-mm wafers and the first line will be coming online in this first quarter. There are some things happening that will increase the capability to produce parts."
No new information was released today about Intel's plans for 2002 capital spending. Some analysts believe the 2002 budget could be about $1 billion less than 2001, while other observers say the amount will be less than $4 billion. Intel has said it will not provide an initial estimate for 2002 capital spending until January.
Intel said its Q4 gross margin percentage is expected to be within the previous expectation and above the midpoint of that range. All other expectations are unchanged, according to the company.
Prior to today's mid-term update and conference call, Wall Street analysts had been predicting Intel earnings at $0.10 per share in the fourth quarter, based on a survey by First Call/Thomson Financial. In October, Intel posted Q3 earnings of $0.10 per share, or $106 million, on revenues of $6.5 billion.
--J. Robert Lineback