AMD, Intel Hike Q4 Outlooks

Investors in the semiconductor industry had some reason to cheer Thursday as both AMD and rival Intel raised their fourth quarter outlooks.


AMD said it expects fourth quarter sales in 2002 to reach $700 million, while Intel expects revenue to be between $6.8 billion and $7.0 billion for the same period.


For AMD, the news marks a 35 percent leap over this year’s third quarter results, which had many analysts spelling doom for the number-two chip maker as sales lagged and rival Intel gained stride with new product additions to its Intel Xeon processor lineup, including the release of its Pentium 4 processor at 3.06 Ghz.

AMD had previously estimated only a 20 percent sales increase over last quarter and is attributing this growth spurt to a sudden uplift in sales for its Athlon XP PC processors and high-density Flash memory devices, particularly for the high-end mobile phone market, the company said.

Some industry watchers are hopeful that the pick-up in sales for AMD could signal a long-awaited turnaround for the industry, which has been knocked to its knees in recent months.

For AMD, the past year has also taken a toll. After hitting its heyday in 2001 with revenues in the billions, AMD has seen its stock slip 68 percent since the beginning of the year as a direct result of the slump in the market and a slowdown in processor sales.

AMD announced a cost-cutting strategy in November that included the elimination of 2,000 jobs, or 15 percent of its workforce, from AMD facilities in the U.S., Europe, and Asia.

Although despite all the doomsayers, AMD’s President and CEO Hector Ruiz has remained optimistic that his company will someday soon oust Intel from the number-one seat in the processor market.

Ruiz told the crowd at Comdex Las Vegas this Fall that AMD is on the verge of releasing a slew of new products that will bolster company sales, and that AMD’s new strategy will be to focus on the mini-computer market that powers cell phones, personal digital assistants, digital television, and automotive telematic systems.

AMD is also scheduled to release its newest processor, the AMD Athlon 64, based on the company’s Hammer technology, which is aimed for the desktop and mobile PC market. The Athlon 64 is slated for release by mid-2003.

AMD’s fourth quarter results will be made public on January 16, 2003.

After the bell, Santa Clara, Calif.’s Intel said it expected revenue for the fourth quarter to be between $6.8 billion and $7.0 billion, several cuts above its previous estimate of of $6.5 billion to $6.9 billion.


The chipmaker atributed the estimated lift to the overachievement of its Intel Architecture business, due mostly to higher sales in Asia. Intel’s communications businesses are in line with the company’s expectations at the beginning of the quarter.


The gross margin percentage is expected to be at the high end of the previous range of 49 percent, plus or minus a couple of points. Gains or losses from equity investments and interest and other are expected to be a net loss of $90 million, as compared to the previous expectation of a net loss of $50 million.

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