News

Intel Raises 3Q Sales Outlook

• By The Associated Press
• September 10, 2007

The announcement came on the day rival Advanced Micro Devices Inc., a smaller chip maker that has struggled financially in recent quarters, hoped to own the headlines with the launch of its ballyhooed new server chip.

Intel added $200 million to the top of its financial outlook, saying it now expects sales of $9.4 billion to $9.8 billion in the current quarter. That compares with the previous forecast of $9.0 billion to $9.6 billion.

Santa Clara-based Intel also told investors that profits are expected to be at the upper range of the company's previous guidance. Gross profit margin, a key measure of Intel's profitability, is expected is expected to be within the upper half of the previous estimate of 52 percent of revenue, plus or minus a couple of percentage points.

Intel cited higher demand worldwide for its products for the upgrade. Intel's and AMD's primary products are microprocessors, which act as the core calculating engines in computers, from desktops and laptops to larger corporate servers that handle Internet traffic and other large volumes of data.

Intel shares rose 27 cents to 25.74 in mid-afternoon trading Monday. AMD shares were up 29 cents to 12.90.

The brightened financial forecast came as AMD was preparing launch events around the world Monday for its newest Opteron brand server chip, the biggest overhaul to AMD's product lineup since the first Opteron chip was introduced in 2003 and gave AMD a foothold in the lucrative server market.

With Opteron, AMD had captured about a quarter of the worldwide market by the time the company's momentum appeared to peak last year, according to market-share data from Mercury Research.

AMD hopes the new product -- which Chief Executive Hector Ruiz has acknowledged is six months behind schedule -- can help it regain some of the ground it has lost to Intel since last year and break even by the end of this year.

Intel, whose market value of $150 billion on Monday makes it 21 times as big as Sunnyvale-based AMD, has squeezed its smaller competitor with severe price cuts and a quick transition to a more advanced manufacturing process that lowers costs while boosting chip performance. Armed with a powerful new product lineup, Intel has roared back to command about 87 percent of the server market, according to Mercury Research.

Intel's comeback has helped it reverse some of its own financial misfortunes from last year, when its profit fell 42 percent from the previous year and the company was scrambling to offer products that could compete with AMD's latest offerings.

For the first six months of this year, Intel earned $2.91 billion on $17.5 billion in sales. Profits were up 30 percent from the same period the previous year.

Meanwhile, AMD, which was still digesting its controversial $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., lost $1.21 billion on $2.61 billion in sales in the first six months of 2007.

In the same period a year earlier, AMD had net income of $274 million on $2.55 billion in revenue. AMD has said the results don't directly compare between the years because of the ATI acquisition.