SAN FRANCISCO (Reuters) - Intel Corp., the world's largest maker of semiconductors, on Tuesday beat analysts estimates with sharply higher quarterly profit and revenue driven by record shipments of microprocessors and other chips.
The company also forecast higher revenue in line with bullish Wall Street expectations and an equally strong gross margin in the fourth quarter.
Shares of Intel (NasdaqNMINTC - News), whose chips are used in four out of five personal computers, rose slightly in after-hours, ticking up to $31.28, a gain of 20 cents from the Nasdaq close.
In an interview with Reuters, Chief Financial Officer Andy Bryant attributed the year-over-year rise of nearly 150 percent in net income to "cost cutting, cost containments (and) investment in new products hitting at a time when demand picks up a little bit."
He said the company is able to keep gross margins high partly due to strong sales of pricier products like laptops and servers. Intel makes microprocessors, the brains that run a computer, as well as other chips designed to work together to perform various functions.
Net income for the third quarter was $1.7 billion, or 25 cents per share, more than doubled the $686 million, or 10 cents per share, posted a year earlier, Intel said.
Revenue for the quarter was $7.8 billion, compared to $6.5 billion a year ago, the Santa Clara, California-based company said.
Intel's third-quarter revenue outpaced its own forecast for $7.6 billion. Analysts had on average had expected Intel to post revenue of $7.7 billion and earnings per share of 23 cents, according to Reuters Research.
Intel saw strong sales in so-called emerging markets, including China, Russia and India in the third-quarter, while sales in the United States grew by a smaller margin, Bryant said.
"What we always expected was to see the mature economies' IT (information technology) spending lag the economic recovery, which is beginning to see some signs of life," he said.
In the fourth quarter, Intel said it expects to post revenue of $8.1 billion to $8.7 billion. Analysts had expecting Intel to post fourth-quarter revenue of $8.3 billion, near the midpoint of its forecast range, according to Reuters Research.
Intel said it sees fourth-quarter expenses of $2.2 billion to $2.3 billion with a gross margin of about 60 percent, plus or minus a few percentage points, compared with 58.2 percent in the third quarter.
It narrowed its 2003 capital spending forecast range to between $3.6 billion and $3.7 billion from the previous range of $3.5 billion to $3.9 billion.
Spending on research and development for 2003 is expected to be $4.3 billion, up from the previous expectation of $4.2 billion, Intel said.
Charlie Glavin, an analyst with ThinkEquity Partners, said Intel's third-quarter margins and outlook for the fourth quarter were extremely positive. "They just guided for a really strong Q4," he said.
Expectations in the chip industry have been rising in recent months, with companies saying they are seeing stronger than expected consumer sales and providing upbeat outlooks.
The Semiconductor Industry Association and analysts are forecasting growth of 10 percent or more this year after chip sales rose marginally last year and declined sharply in 2001.
Investors and players in the high-technology sector pay rapt attention to the bellwether's results and forecast, as Intel's health can be crucial for any overall tech rally.
Shares of Intel closed at $31.08, up 28 cents in active trade on the Nasdaq.
The company's shares have risen nearly 100 percent since the beginning of the year while the Nasdaq has risen 45 percent and the Philadelphia Stock Exchange semiconductor index has risen 64 percent.
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