Intel on Tuesday reported third-quarter financial results that were solidly better than Wall Street had expected, signaling that the PC industry is recovering from a yearlong industry glut, despite a worldwide economic slowdown.
The world's biggest computer chipmaker will continue to cut jobs to save costs, however. Intel said it plans to eliminate 675 jobs in its Hudson, Massachusetts plant and 500 to 700 people in Puerto Rico in 1999. Intel will have reduced its headcount by 3,000 by the end of 1998.
After the market closed, the Santa Clara, California, company said net income fell to US$1.56 billion, or 89 cents per share on a diluted basis, from $1.57 billion, or 88 cents per share, in the same quarter last year. Per-share earnings rose because fewer shares were outstanding assuming dilution. Revenue for the quarter ended 26 September rose 9 percent to $6.73 billion from $6.16 billion last year.
Wall Street had expected Intel to earn 80 cents a share, according to First Call.
"We are pleased with our overall performance in the last quarter," Craig Barrett, president and chief executive officer, said in a statement. "We had growth across nearly all of our geographies and product lines, including strong microprocessor sales. In the third quarter, the PC industry recovered from its inventory problems and is benefiting from strong seasonal demand."
Intel was also cautiously bullish about the coming months. The company said fourth-quarter revenues would be up slightly from the third quarter, and that revenue in the second half of the year would be greater than the first half. Expenses in the fourth quarter are expected to be about 3 to 5 percent higher than third-quarter expenses of $1.4 billion.
The chipmaker said it set records in quarterly revenues and in unit shipments of microprocessors, which Barrett attributed to new chips introduced to meet the needs of low-price and power-user PC makers.
"This is hopefully signaling a little bit of uptick in market," said Kelly Henry, analyst at research firm International Data Corp. "I would expect it to continue into the fourth quarter."
But Henry added that Intel lost market share in the third quarter -- from 82.6 percent to about 78 percent -- mostly to rival Advanced Micro Devices (AMD). "It's a pretty substantial drop."
IBM's (IBM) chips also eroded market share, said Henry, but she predicted Intel would gain a bit of it back in the fourth quarter.
The results came out after the market closed. Intel's stock fell $1.87 to $83.56 Tuesday on the Nasdaq.
