Shares for Intel, maker of the extremely popular Core i processors, rose in U.S. trading after the company predicted fourth quarter sales that exceeded the estimates of most analysts. Intel cited strong demand for laptop computers in emerging markets as one of the reasons for growth.
According to a statement from the company, revenue will increase to $14.7 billion, give or take $500 million. The average of projections from analysts compiled by Bloomberg only put the world’s largest chip manufacturer at a revenue of $14.2 billion. Fourth quarter gross margin, which is the percentage of sales after deducting production costs, is said to be around 65%.
Intel has stated that the sales of notebook computers is what is driving earnings, especially considering the fact that unit growth as a percentage is in double digits. The outlook defied what analysts had predicted, that consumers are turning away from laptops in favor of tablets and smartphones. In addition, Intel may have also benefited from Advanced Micro Devices, the company’s rival, to supply enough of its own new chips.
According to Wasatch Advisors Incorporated Portfolio Manager Michael Shinnick, “Even though I’ve been a believer for some time, this was a pleasant surprise. You have this huge demand for server chips as well as the leapfrogging that’s happening in the emerging markets, where they’re going from pencil and paper to computing.”
In addition, Intel also increased its stock-buyback program by $10 billion. This brought the company’s total available for repurchases up to $14.2 billion at the end of the third quarter. The company also watched shares rise 3.6% to close at $24.24 in New York. These shares have gained 15% overall for the year.
Intel’s chips are in more than 80% of the world’s PCs. With numbers like that it is hard to imagine the company not seeing profits and gains. Even though most analysts wrote the company off, at the moment Intel has proven that it is still the undeniable leader in the world of chip manufacturing.
Source: Business Week – Intel Gains After Forecast Tops Estimates on Laptop Demand