Intel increases revenue outlook on rising chip demand

Intel trims another business division, upgrades its Q3 forecast on the same day rival AMD launches its Barcelona chip

Citing surprisingly high demand for its processors, Intel on Monday upgraded its third-quarter revenue forecast to a range of $9.4 billion to $9.8 billion from the company's previous estimate of $9 billion to $9.6 billion.

Both ranges are far above Intel's results in the third quarter of 2006, when the company collected $8.7 billion in revenue, a 12 percent drop from the same quarter the previous year. Intel's sagging performance in 2006 led to a corporate restructuring plan including thousands of layoffs and the sale of several divisions.

The company has posted much stronger results in 2007, despite a lingering price war with rival Advanced Micro Devices. In July, Intel beat Wall Street estimates with second-quarter revenue of $8.7 billion, with profit up 44 percent over the same period of last year.

Intel's financials forecast upgrade came the same day that AMD launched its Barcelona quad-core Opteron server chip, which is expected to be a strong competitor to Intel's current server chips.

However, Intel said its new forecast is generated by demand throughout its business units, including notebook and desktop chips as well as server processors.

"We're seeing strength in revenue across the board," said Intel spokesman Tom Beermann. The company will give more detailed results when it reports its third-quarter earnings on Oct. 16.

Also on Monday, Intel trimmed another business division, agreeing to sell certain assets of its modular communications platforms business, which makes telecommunications boards, to RadiSys for $31.75 million. The parts of the division being sold to RadiSys make ATCA computing and packet processing blades, ATCA chassis, AMC modules, and cPCI blades and chassis.

The deal with RadiSys did not contribute to Intel's revised revenue forecast today, Beermann said. Intel expects "a significant number" of employees to accept new job offers and move to RadiSys, but has not estimated the number. They will include workers in the engineering, product testing/validation, operations and marketing departments. RadiSys makes ATCA platforms and other products for telecommunication equipment manufacturers. The deal is expected to close in September.

Copyright © 2007 IDG Communications, Inc.

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