The Intel Corporation raised its financial outlook for the current quarter yesterday, citing stronger-than-expected demand for microprocessors and high hopes for the back-to-school shopping season.
The announcement threatened to upstage a rival, Advanced Micro Devices, in its most important product announcement in years: a higher-performing version of its Opteron chip for server computers that it hopes will help it return to profitability.
Intel, of Santa Clara, Calif., said it now expected revenue of $9.4 billion to $9.8 billion in the third quarter, up from its earlier estimate of $9 billion to $9.6 billion. The average forecast of Wall Street analysts calls for Intel’s revenue to be about $9.4 billion for the quarter, according to a survey by Thomson Financial.
The company also said it expected gross margin “in the upper end” of its forecast of 52 percent plus or minus several percentage points.
Intel’s margins disappointed during the second quarter, coming in at 46.9 percent, well below its forecast of 48 percent, because of lower average selling prices for its microprocessors.
Intel shares climbed in early trading yesterday, immediately after the report, but then declined 12 cents, to close at $25.35. Shares of A.M.D. rose 33 cents, or nearly 3 percent, to close at $12.94.
Intel’s stock has rallied in recent months, from about $19 a share six months ago, and many investors say they believe that the company is reclaiming its technological leadership over A.M.D., which is based in Sunnyvale, Calif.
After several consecutive quarters of losing market share, Intel in recent quarters has released a host of new multicore processors, including its first quad-core chip, while A.M.D. has suffered from pricing pressure and a short-term inventory glut. In July, A.M.D. reported a $600 million loss for the second quarter, its third loss in a row. The company is also still struggling to absorb ATI Technologies, the graphics chip maker it acquired last year for $5.6 billion.
But A.M.D., which has lately been gaining back market share as it works off inventory, is banking that its latest server chip will help it return to profitability. The new chip uses so-called quad-core technology, where four processors are placed on one piece of silicon, allowing greater performance and energy efficiency. A.M.D. executives said yesterday that they expected the company to have a strong second half.
Intel’s report and A.M.D.’s optimism appear to have somewhat quashed fears that widening problems in the housing market might damp purchases of large consumer products like home computers — at least for now.
“There isn’t a lot of evidence that there’s been an impact on the computing market,” said Dean McCarron, principal analyst at Mercury Research. “All the signs are the market is doing well.”
Ashok Kumar, an analyst with the CRT Capital Group in San Francisco, agreed that the computer industry had not yet seen any fallout from the mortgage crisis, but he said the economic climate could make it hard to forecast sales later in the year. He said demand for notebook computers continued to be strong, particularly in emerging countries. Microprocessors used in notebooks have a higher average selling price than chips for desktop computers, so the impact on revenue is greater.
Tom Beermann, an Intel spokesman, said the revised forecast was “based on what we’re seeing worldwide in terms of strength in revenues from chipsets and microprocessors,” but he would give no further details.
Intel is scheduled to release its third-quarter report on Oct. 16.
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