Tech giant Intel today posted a 12 per cent rise in quarterly profit, and said demand was holding up despite the ailing economy.
Intel said yesterday it expects revenue in the fourth quarter of $10.1 billion (5.8 billion) to $10.9 billion. The midpoint of that range, $10.5 billion, is around two percentage points lower than Wall Street had hoped but better than many had feared.
Investors said Intel is benefiting from one of its strongest product line-ups in years, is executing well and keeping a lid on costs. But the company's uncertainty over the financial crisis's influence on the computer sector limited the positive effect on other tech stocks.
"For me, this is a relief rally more than anything else," said Sean Conner, senior equity analyst, First American Funds in Minneapolis.
"If you have to be somewhere with a slower future, this may not be a bad place to be," said Mike Holland, fund manager at Holland & Co, which oversees assets in excess of $4 billion, including Intel, IBM and Apple.
Santa Clara, California-based Intel said the average selling price for its microprocessors dipped as sales increased of its smaller, lower-priced Atom processor for use in new mobile computers that are smaller than conventional notebooks. It said it generated $200 million in revenue from Atom chip sales.
"As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand," chief executive Paul Otellini said in a statement. He added that he was confident in his company's ability to outpace competitors "at a time when business levels are difficult to predict."
"In light of what's going on in the economy, in the market, it's nice to see a company come through and actually beat numbers," said Jason Pride, director of research at Haverford Trust Co., which owns Intel shares.
But Pride cautioned that the current fourth quarter and next year is when business will probably see "a little bit more of the tech demand seepage as the economy softens."
The company, which is the industry's biggest investor in the next generation of chip production equipment, trimmed its capital spending plans modestly for 2008 to $5 billion, plus or minus $100 million, from $5.2 billion previously.
Intel had "some really strong results," Chief Financial Officer Stacy Smith said in a telephone interview.
"But based on the credit market issues that are roiling the market it's a little harder to get a handle on what end demand is in the fourth quarter," he told Reuters.
Smith said that business in the third quarter in the Asia-Pacific region was above seasonal patterns, including Japan. He said Japan did well because of a shift to laptops from desktops.
But Smith said Europe and the United States were below seasonal patterns. "We did see a little bit of weakness in the corporate sector of the business," he said of Europe and the United States.
