Intel raises sales forecast; shares jump 5 percent
NEW YORK -- Intel Corp. raised its third-quarter revenue forecast above Wall Street's expectations Friday, citing strong demand for its chips and giving another signal that business is improving for one of the world's biggest technology companies.
Intel's shares rose nearly 5 percent in morning trading.
The leading maker of computer microprocessors said it now expects sales of $8.8 billion to $9.2 billion. Its last guidance, which came July 14, was for revenue in the range of $8.1 billion to $8.9 billion.
Analysts polled by Thomson Reuters were expecting $8.55 billion in revenue before Friday.
Santa Clara, Calif.-based Intel also said it expects the quarter's gross profit margin to be in the upper half of the range it previously forecast.
Intel had already signaled in July that its business was on the mend after a difficult downturn and the personal-computer industry's worst stretch since 2001. The company's second-quarter sales were well past Wall Street's expectations, and its guidance for the current quarter was better than what analysts were predicting at the time.
"Intel was clearly being more conservative than they needed to be," said Broadpoint AmTech analyst Doug Freedman of the company's earlier outlook.
Although Intel said Friday that demand for its products is strong, the implications for the struggling personal-computer business are unclear.
Intel's sales exceeded expectations in the last quarter partly because PC makers needed to restock their chip inventories after letting them run lower than normal to save money.
And Dell Inc., the world's No. 2 PC maker, said Thursday as it reported quarterly earnings that while consumers are showing more signs of coming back to stores to buy PCs, corporations are still holding off. Dell said it might not see a significant turnaround in tech spending by businesses until next year.
By then, many companies will need to begin replacing older PCs that they've been hanging on to for longer than usual, and will have a new version of Windows available.
"There are a lot of moving pieces in the PC industry as we prepare for a new operating system from Microsoft," Freedman said.
Still, Freedman said Intel's improved forecast is a clear sign that consumer spending is getting better, and maybe among the "very first signs of a little bit of recovery" in corporate spending.
Even with the raised forecast, Intel's sales would still fall from last year. The company's third-quarter revenue was $10.2 billion in 2008.
Intel shares rose 90 cents, or 4.6 percent, to $20.37 in morning trading. The stock has traded between $12.05 and $23.71 over the past year.