Update: I added a bit more detail, news of the CFO switcheroo, and a self-congratulatory but illuminating quotation from Intel's CEO.
Intel on Tuesday stomped all over estimates of its quarterly financial performance--not only Wall Street's but its own.
Three months ago, the Santa Clara, Calif.-based chipmaker in September predicted revenue of $9 billion to $9.6 billion for the third quarter of 2007. Then, in September, it raised it to a.
The real number: $10.1 billion, a 15 percent increase from the year-earlier quarter. And net income of $1.9 billion, or 31 cents per share, a 43 percent annual increase. Revenue exceeded Thomson First Call analysts' average expectation of $9.6 billion by nearly a half billion dollars, while net income was a penny more than the 30 cents per share expected.
Wall Street analysts will get to spend some more quality time with their spreadsheets soon. For the last quarter of 2007, they have been expecting revenue of $10.4 billion, but Intel set its guidance to between $10.5 billion and $11.1 billion.
Intel ascribed the results to strong sales of its processors--the most it ever sold in a quarter, though average prices remained flat. Also contributing were strong sales of chipsets, which support the central processors, and of flash memory. With costs of the transition to 45-nanometer manufacturing process dropping, gross margin--a measurement of how much revenue turns into profit--increased from 46.9 percent in the second quarter to 52.4 percent in the third.
Chief Executive Paul Otellini tooted his horn and indicated that he expects to do more tooting next quarter.
"A combination of great products, strong and growing worldwide demand, and operational efficiency from our ongoing restructuring efforts led to record third-quarter revenue and a 64 percent year-over-year gain in operating income," Otellini said in a statement. "We see each of these elements continuing to improve into the fourth quarter. We are very pleased with the results and optimistic about our business."
Intel stock rose $1.17, or 4.6 percent, to $26.65 in after-hours trading.
In the third quarter, Intel sold 2 million quad-core processors. Rival Advanced Micro Devices has just launched its first quad-core chip, code-named Barcelona, and doesn't expect significant revenue until the fourth quarter. That's a sharp reversal from two years ago, when AMD was riding high after stealing market share from Intel.
Also Tuesday, Intel promoted Stacy Smith to chief financial officer, replacing Andy Bryant, who held the job since 1994. Smith, who was assistant CFO, still will report to Bryant, though, whose new title is chief administrative officer.
Otellini indicated that the move was relatively routine. "These moves are part of our long-term succession planning," Otellini said on a conference call with analysts.