Intel’s positive revenue forecast may signal industry is recovering

Associated Press

SAN JOSE, Calif. — In another sign the semiconductor industry may be recovering, Intel Corp. and Advanced Micro Devices said Thursday their fourth-quarter revenues are expected to exceed earlier forecasts.

Santa Clara, Calif.-based Intel said revenue for the three months ending Dec. 29 will be between $6.7 billion and $6.9 billion, compared with the previous range of between $6.2 billion and $6.8 billion.

Sunnyvale-based AMD also said sales would be up 10 percent or better compared with the third-quarter’s $765.9 million. The company earlier said it expected flat to single-digit growth.

Both companies cited strength in microprocessors, the brains of all power computers. No per-share earnings estimates were released.

In the third quarter, Intel reported revenue of $6.5 billion, down 25 percent from $8.7 billion in the same period a year ago. AMD’s revenue fell nearly 37 percent from a year ago.

Intel earned $106 million, or 2 cents a share, in the third quarter, compared with $2.51 billion, or 41 cents a share, in the same time last year. Analysts are expecting profits of 10 cents a share in the fourth quarter, according to a survey by Thomson Financial/First Call.

AMD, on the other hand, lost $186.9 million in the third quarter, or 54 cents a share, compared with a profit of $408.6 million, or $1.18 per share in the same period a year ago. For the current quarter, analysts expect a profit of 5 cents a share.

Both companies have been fierce rivals and engaged in a price war over the summer to bolster market share.

Intel also has accelerated the launch of its flagship Pentium 4 and the phasing out of the Pentium III on desktops, while AMD during the quarter rolled out the Athlon XP processors.

AMD’s new processor does not run as fast as the Pentium but it costs less and in some cases offers better performance. In its statement, AMD said it expects to break its unit-sales record.

"We think they’re seeing very good sales because of the price-performance advantage," said Eric Rothdeutch, an analyst at Robertson Stephens.

Rothdeutsch added he does not believe the stronger sales translate into strength for the personal computer market overall.

"We are still expecting worldwide PC sales to be down 8 percent year to year," he said.