Intel prepares for uncertain fourth quarter

Intel has revealed record third quarter results and said that while it is confident about the forthcoming quarter it is nevertheless preparing for a wide range of possible scenarios.

The company reported that it had had another record quarter, pulling in revenues of $10.2bn with an operating income of $3.1bn. However the company made its widest ever range of revenue forecasts for the fourth quarter, between $10.1 and 10.9bn, reflecting the uncertainty about global markets.

“The range of revenues is broader than we’ve ever given you before,” said chief executive Paul Otellini.

“That covers all possible situations within the market.”

He said that he expected the corporate side of the market to be soft as businesses restricted spending on systems and cut back, although the Asia/Pacific region wasn’t suffering. Consumer spending was expected to be light but continued interest in notebooks and netbooks remained strong.

Overall Otellini said that the company was in good shape to weather any financial downturn. The company has 20,000 staff less than its peak in 2006 and cash reserves of over $12bn with very little debt.

In an unusual step he also said that the company would issue a mid-quarter earnings statement on December 4th to update the markets on progress as the financial situation developed.

Overall Intel could come out of any financial downturn stronger than it went in, said chief financial officer Stacy Smith. Intel’s corporate structure and strong financial position should insulate it from a serious downturn and its competitive position would be strengthened he said.

“This is not a dot com style downturn,” said Otellini.

That was principally people selling computers cheaply on eBay from companies that melted down. Here emerging markets make a difference, as the cost of computing has come down there based on growing income levels. Technology will probably do well from a downturn, because we sell the tools of productivity.”

Overall mobile revenues accounted for 45 per cent of revenues for the company, with strong demand for the Atom range of processors. In the third quarter demand had outstripped supply he said but Intel would be able to meet demand by the end of the fourth quarter.

He also commented on AMD’s restructuring, saying that it didn’t change the fundamentals of the business.

“From my perspective nothing has changed,” he said.

“You still have someone having to build the capital and build products and sell them to someone else. The food chain hasn’t changed; there’s just one more person in the chain looking for a profit.”

Looking to the future the uncertain economic climate would not harm spending on new technology, such as the forthcoming 32 nanometre line of chips. The bulk of the costs of shifting to the new manufacturing process would come in the first half of next year but there were no plans to cut funding.