Intel ‘Comfortable’ Despite Economic Uncertainty

Intel, the world’s biggest computer chipmaker, is comfortable with its forecast for revenue in the current third quarter in spite of the continued macroeconomic woes, its CFO said on Tuesday.

Asked if he was OK with Intel’s (NASDAQ: INTC) forecast for third-quarter revenue of $10.0 to $10.6 billion, CFO Stacy Smith told Reuters: “Of course I’m still comfortable with it. It’s still my forecast.”

Analysts currently expect the company to have third-quarter revenue of $10.3 billion, according to Reuters Estimates.

“It’s a very uncertain macro environment,” Smith said in an interview. “It’s not true just in the United States, it’s true in Europe in terms of slowing growth. That being said, what we’ve seen in the last nine months is our business being pretty normal.”

Intel last month reported a 25 percent rise in quarterly profit, helped by strong sales of its microprocessors used in notebook computers and gave a forecast that topped expectations at the time. It continues to do well despite a weak global economic environment, aided by market share gains against its smaller rival Advanced Micro Devices (NYSE: AMD)

Smith also said demand for Intel’s low-power, low-cost chip called Atom is off to a good start. It is designed to go into super-slimmed-down notebook PCs, consumer electronics devices and embedded markets such as set-top cable boxes.

“Atom is off to a very, very rapid start, far exceeding our expectations when we started the year,” Smith said. “It’s the perfect recession product to have in the marketplace.

“It plays very well, in the mobile marketplace, it plays in emerging markets, it plays into people’s desire to have a second PC or one for the kids that’s low coast yet sill capable,” Smith said of Atom. “It’s off to the races.”

Smith also said that he was not unduly concerned about Atom cannibalizing sales of its existing Core chips, but allowed that he would not mind sales of Atom eating a bit into those of its low-cost Celeron processors.

“If it’s cannibalizing from the Celeron part of the market, I’ll take that any day,” Smith said.

He said that Intel gets about 2,500 Atom processors per silicon wafer, meaning that its profitability on Atom — while not as great as on a Core or Xeon chip — is still quite healthy.

“We’ll know kind of in six months how much of this demand [for Atom] is real and how much is customers thinking they’re going to win in the market place and double ordering,” Smith added. “It seems to be growing the market rather than cannibalizing existing PC sales.”

Smith also said that interest among customers that would use Atom in the embedded market has been strong. While it takes longer for Intel to realize revenue from the embedded market because of longer design cycles, once its product has been designed in to a car or cable box, it remains for years.

“They now have a product that’s designed much more for their market than what they’ve had available to them in the past,” Smith said of Atom in the embedded market. “They’re getting great interest from their own customer base.”

Smith also said that despite economic uncertainty in markets around the world, Intel’s own business continues to hold up well.

Smith said he believes the strength of Intel’s product lineup relative to AMD is helping it to weather uncertain economic times, as well as a rapid move to mobile PCs and devices.

“Even in the downturn we’re seeing investments in technology continue,” Smith said.

Intel’s shares rose 4 cents to $24.42 in late trading.

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