Intel Hikes Sales Forecasts

Intel Corp. and its longtime rival, Advanced Micro Devices Inc., on Thursday both boosted their sales forecasts for the fourth quarter, suggesting that holiday sales of personal computers may not be quite as grim as many had feared.

Intel, Santa Clara, California, indicated it now sees fourth-quarter sales at the high end of its previously given forecasted range of $6.2 billion to $6.8 billion, and may exceed that. AMD expects sales to rise 10 percent or a bit more from the third quarter's $765.9 million. Last month, the company forecast sales to be little changed to up slightly.

Analysts and investors have raised expectations since last week, when Chief Financial Officer Andy Bryant said at an investor conference in Arizona that he was increasingly confident in its quarterly sales. Intel now expects fourth-quarter sales of $6.7 billion to $6.9 billion.

"In fact revenue may slightly exceed our previous expectations," Bryant said on a Thursday conference call to discuss the update. "Business appears to have returned to seasonal patterns."

Typically, fourth-quarter sales are higher than in the third, paced by holiday sales. The company also said that supplies for its Pentium 4 chips are tight and it can't get enough chips to customers who want them, which could be benefiting Sunnyvale, California-based AMD.

However, the sales increase in the fourth quarter from the third is typically higher. In Intel's case, its revised guidance suggests a rise of 2 percent to 5 percent. Historically, that increase has been 10 percent or more.


Analysts forecast Intel's profit at 10 cents a share, with a range of 8 cents to 12 cents, according to Thomson Financial/First Call. Sales were pegged at $6.59 billion.

Shares of Intel fell 45 cents to $34.16 before the announcement, after the close of regular U.S. trading. Its stock has jumped 25 percent in the last month amid a rally in chip stocks. In after-hours trading, Intel climbed to $34.83 and AMD stock's price rose to $17.20, after rising 1 cent to $16.25. AMD shares are up 22 percent in the last month.

Intel has been moving as quickly and as aggressively as possible to make only the Pentium 4 chip and phase out the less expensive Pentium III chip by the end of the year. Robertson Stephens analyst Eric Rothdeutsch estimates that Intel gets an average $210 per Pentium 4 chip, compared with an estimated $140 for the Pentium III.

Intel and other semiconductor makers have suffered a bruising year of falling sales and profits as the $200 billion industry has been mired in its worst-ever slump amid slowing economies and weak demand.

With a 78 percent share of the market for microprocessors, the primary computing engines of personal computers, Intel relies on processors, chipsets and motherboards for about 80 percent of its sales.

AMD, for its part, unveiled its Athlon XP processor on Oct. 9, and said demand has been strong, adding that it expects to displace the previous record of 7.8 million processors shipped set last quarter.

AMD also said that it expects its operating loss to be less in the fourth quarter than the third period's $135.4 million. Analysts had expected AMD to report a loss of 27 cents a share on sales of $786 million, according to First Call.