Intel Raises Forecast Amid Robust Chip Sales -- 2nd Update
October 25 2018 - 7:04PM
Dow Jones News
By Jay Greene and Micah Maidenberg
Intel Corp. overcame its challenges in meeting red-hot demand
for computer chips, posting 19% growth in revenue and signaling
Thursday another strong quarter ahead.
The chip maker's profit surged 42% despite the company facing a
raft of obstacles, including delays rolling out a new generation of
more densely packed processors, as well as its continuing search
for a chief executive after Brian Krzanich left abruptly in
June.
Intel said last month that surprising growth in the market for
personal computers was pressuring its factory network. But that
strong demand turned out to be a positive as well. Intel has
focused manufacturing capacity on servers and higher-end PCs, and
that boosted revenue and profit.
Intel reported revenue of $19.16 billion in the third quarter,
up from $16.2 billion a year earlier and more than the $18.1
billion expected by analysts, according to FactSet.
Net income rose to $6.4 billion. On an adjusted basis, Intel's
profit came to $1.22 a share, well more than the $1.10 expected by
analysts, according to FactSet. Profits were helped by a tax rate
of about 10% in the third quarter, down from 24% last year.
Intel doesn't expect the solid demand for its chips to abate
anytime soon. Its fourth-quarter forecast for revenue of about $19
billion topped Wall Street's estimate, and the company now expects
sales of $71.2 billion for all of 2018, up from its prior forecast
of $69.5 billion.
Shares were up less than 1% in after-hours trading Thursday,
after finishing the regular session up $4.5% at $44.31.
Intel has been without a full-time CEO since Mr. Krzanich
resigned for violating company policy by having a relationship with
a co-worker. Finance chief Bob Swan, who has been filling in as
CEO, reiterated in an interview Thursday that he isn't interested
in the job full time.
"Nothing has changed," he said. He said the board is searching
for a successor "with a sense of urgency," but that it hasn't put a
timetable on making a pick.
In the absence of a full-time chief, Intel has had to grapple
with a vexing shortage of processors to meet the PC demand. Global
PC shipments rose 1.4% in the second quarter -- the first increase
in six years -- and ticked up 0.1% in the third quarter as
corporate customers bought PCs running Windows 10, replacing older
models, according to research firm Gartner Inc.
Mr. Swan said Intel was "struggling to keep up" with demand, but
declined to estimate the amount of revenue Intel has missed out on.
He said the company is building out capacity to handle the surge.
Intel increased its capital-spending plans by $1.5 billion to $15.5
billion this year to address the need.
Sales for the company's segment that serves the PC market rose
16% from a year earlier to $10.23 billion. Sales in its data-center
segment, Intel's second-largest unit and a strong profit driver,
increased 16%.
The surging demand comes as Intel faces challenges ramping up
production of its densely packed processors. Three months ago,
Intel shares sank as investors fretted over continuing delays in
the rollout of so-called 10-nanometer chips to reach volume
production.
Intel had surprised investors by saying it expected volume
production would allow it to get systems with the new chips on
store shelves by the holiday season in 2019. Thursday, Mr. Swan
said that timetable remains on track.
Write to Jay Greene at Jay.Greene@wsj.com and Micah Maidenberg
at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
October 25, 2018 18:49 ET (22:49 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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