SAN FRANCISCO – Intel Corp. (INTC), the largest maker of microchips, Thursday raised its quarterly revenue outlook, citing strong worldwide demand for its microprocessors, and its shares jumped more than 7 percent.
Revenue in the quarter ending Dec. 25 is now expected to reach $9.3 billion to $9.5 billion, compared to an earlier target of $8.6 billion to $9.2 billion. The gross profit margin for the quarter is now seen around 55 percent to 57 percent, from an earlier target of about 56 percent.
The news appeared to lift a dark cloud from over the chip maker, which has suffered in recent months from a string of cancellations, product missteps, and bloated inventories. Intel's shares have fallen 29 percent this year, while rival Advanced Micro Devices Inc. (AMD) has seen its shares rise by more than 50 percent.
Analysts were expecting the maker of Pentium chips (search) to earn 28 cents per share on sales of about $8.97 billion.
"I am ecstatic," said Harry Papp, a partner at L. Roy Papp & Associates, which manages more than a million Intel shares. "This tells me end-user demand is healthy. We're going to see earnings growth for the next several years at Intel."
Intel shares fell 39 cents, or 1.7 percent, to $22.71 in trading on Nasdaq before the results were announced. In after-hours trading on Inet, the stock rose to $24.35. Intel's guidance, which was far better than most analysts had expected, sent many technology shares up in after-hours trading.
The Santa Clara, Calif.-based company also said it has made progress on a months-old problem with excessive inventory, and expects a net inventory decrease of several hundred million dollars by the end of the quarter.
Intel also said it is reviewing whether to repatriate up to $6 billion in earnings from offshore subsidiaries that may be eligible for repatriation at a lower tax rate under a new federal law. There are no formal plans to do so yet, Intel said, but the company could accrue charges for taxes should it choose to do so.