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Intel delivered a rare piece of good news for Wall Street on Thursday with third-quarter earnings that comfortably beat expectations and a robust forecast for the final months of the year, as a recovery in sales of PC chips pointed to a more solid end to the year for the struggling company.
Revenue was down 8 per cent from a year ago, reflecting the deep inventory correction that hit the company early this year. But at $14.2bn, it was 9 per cent higher compared with the preceding three months and topped the $13.6bn Wall Street had been expecting.
Along with a forecast that revenue would recover further to reach $14.6-$15.6bn in the current quarter, compared to analyst forecasts of $14.36bn, that sent Intel’s shares 7 per cent higher in after-market trading.
Dave Zinsner, chief financial officer, said that all of Intel’s businesses had performed better than expected, with PCs leading the way. The company has been losing ground to arch-rival AMD, particularly in the data centre market, after falling behind in its process manufacturing technology. But Intel said on Thursday that it was still on track to meet technology development deadlines that it claims will give it a manufacturing edge by 2025.
Speaking in an interview with the Financial Times ahead of a call with analysts, Zinsner said Intel had continued to lose market share in data centre chips in the latest quarter. But he added that the company’s next generation of data centre chips, codenamed Emerald Rapids and Sierra Forest, were on track for launch next year. “These are products we think have very good competitive position,” he added.
Intel also announced it had signed two more customers for its 18A process technology, taking the total to three, and said it hoped to sign a fourth before the end of the year. Though the company does not expect to start generating revenue from its 18A technology until 2025, the technology is core to Intel’s hopes of building a foundry business manufacturing chips on behalf of other companies.
Net income in the third quarter dropped 71 per cent, to $310mn, due to lower revenue compared with a year before and the costs of ramping up manufacturing for new products. But at 41 cents a share, pro forma earnings were ahead of the 22 cents Wall Street had expected. Intel also forecast pro forma earnings per share of 44 cents in the fourth quarter, compared with expectations of 33 cents.
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