- Intel CEO: Paul Otellini
It’s clear the financial impact is creating some stress that could impact our business.” Paul Otellini said Tuesday as he unveiled thrid-quarter earnings. “As we enter the fourth quarter, we see mixed signs” in the business climate.
Consumer PC traffic seems light so far and “we expect the corporate segment to show some softness,” he said on a conference call with analysts.
Intel said that because of the greater uncertainties it is taking the unusual step of providing a mid-quarter business update on Dec. 4. It also set a larger range than normal for quarterly revenue: $10.1 billion to $10.9 billion.
Despite posting solid earnings, business conditions deteriorated in the third quarter and the company said it took measures to shore up its financial strength. It reduced its projected capital spending for the year, to $5 billion from $5.2 billion and moved to shut down an older 200-mm wafer plant making NAND flash memory chips in its joint venture with Micron Technology.
The company also increased its cash position to $11.8 billion.
And yet, Tuesday’s picture wasn’t all gloom and doom. “I’m of the opinion that technology will do well during a downturn because of the simple fact we sell tools for productivity,” Otellini said.
For that reason, Intel is not slowing plans for the next generation of manufacturing equipment capable of making 32-nanometer circuits on semiconductors or its adoption of the current generation of 45-nanometer equipment.
This is not a post dot.com era pullback, he said. People then stopped buying computers. The pattern is different today. There is strength in emerging markets and China has rebounded since the Olympics, he said.
Yet the company’s fourth-quarter outlook appeared to urge investment analysts to trim their forecasts, which call for revenue of $10.77 billion. The analysts’ projection is well above the $10.45 billion mid point of the Intel range. Additionally, the company pointed out that it anticipated a $50 million fourth-quarter loss in its equity portfolio and investments.
