updated 05:50 pm EDT, Tue October 14, 2008
Intel profits up
Intel's profits gained 12 percent for the third quarter, exceeding Wall Street estimates, despite lackluster sales numbers. The company reported profits of $2 billion compared to $1.79 billion from last year, which increased the earnings per share to 35 cents from 30 cents. The chip manufacturer expects healthy profit margins for the fourth quarter ending in December, however the current economic uncertainty makes for difficult performance forecasting.
There is still a strong possibility for the company to fall short of Street estimates. "We have a high degree of uncertainty around demand in the fourth quarter," said CFO Stacy Smith, "but our execution is good." The company will give a preview of its financials to investors in early December, potentially providing damage control if the market takes a dive.
With Intel's widespread distribution of processors in the majority of PCs and servers, its performance is deeply tied into the overall computer market, for better or worse. The company has taken steps to cushion its margins, however, with new manufacturing technology that allows more chips to be produced from each silicon wafer, and the construction of a new manufacturing facility.
The cost cutting actions have already produced results, with a gross margin increase of 3.5 percent to 58.9 percent. CEO Paul Otellini has confidence that Intel will "outpace peer companies at a time when business levels are difficult to predict."