September 8, 2005 2:17 PM PDT

Intel slims its forecast

Strong demand for notebooks could help Intel again see double-digit growth this year, the company said Thursday during its scheduled midquarter update.

The chipmaking giant said it expects its revenue for July, August and September to be between $9.8 billion and $10 billion. The estimate narrows a forecast Intel issued in July calling for revenue of $9.6 billion to $10.2 billion.

Intel CFO Andy Bryant said there should be no real surprises in Intel's revenue for the third quarter, which ends Oct. 1.

"We have been able to start a few more wafers than we expected this quarter, so my unit costs have been better. Manufacturing came through just as we expected," he said.

The company said it now expects its third-quarter gross margin to be 60 percent, plus or minus a point, and to be slightly above the midpoint of the range. The previous expectation was 60 percent, plus or minus a couple of points.

Intel also said it expects its third-quarter tax rate to be affected by additional taxes of approximately $250 million, plus or minus $25 million, related to a potential repatriation of approximately $6.3 billion of accumulated income earned outside the United States.

Shares of the company closed up 43 cents on the Nasdaq but dropped 34 cents, or 1.3 percent, to $26.09 in after-hours trading.

Notebooks have become a significant profit center for Intel. In the first quarter of this year, notebook chips accounted for 30 percent of Intel's output. That figure is expected to rise to about 33 percent next year, Intel has said.

In the first quarter, notebook sales in U.S. retail, a small, yet significant subsegment of the overall PC market, passed sales of desktops for the first time.

 

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