Intel, AMD Riding High

"What we actually think we're seeing in the fourth quarter is pretty much a seasonal fourth quarter. Nothing out of balance, nothing strange," said Andy Bryant, Intel's CFO. "Everything is just a little better than we thought it would be."

The chip giant matched a similar "midquarter update" by rival Advanced Micro Devices, which also said it was seeing higher sales than it forecast at the beginning of the three-month period.

Intel is forecasting sales of between $6.8 billion and $7 billion for the fourth quarter vs. the $6.5 billion to $6.9 billion it had projected earlier. The company reported $7 billion in revenue for the fourth quarter of 2001.

AMD said it would see sales "approaching" $700 million for the fourth quarter. That figure would represent an increase of about 35 percent from the third quarter vs. the 20 percent increase that the company had expected. Last year, AMD reported $952 million in revenue for the fourth quarter.

Both companies said they also expected profits to be higher because of the rosier revenue projections.

Intel and AMD executives said that PC processor and related sales were strong. Bryant declined to say what sort of sales mix Intel was seeing,whether higher-end chips such as the Pentium 4 or lower-end Celerons were selling better.

While sales in Asia were brisker than expected for Intel, Bryant said Europe and North America were going according to plan.

"In October, the market was good," said David Chang, president of Agama Systems, a Houston white-box maker that produces systems with Intel and AMD processors. "In November, it [stunk. December is a little bit better."

Chang said the "sweet spot" of the white-box space for Agama is systems based on 1.8GHz and 2GHz Pentium 4 processors. The 3GHz version of the Pentium 4, which Intel began shipping last month, is not yet driving sales, he said.

Intel recently enacted a series of price reductions that coincided with releases of new Pentium 4s and new Xeon processors, but Chang said Intel representatives told him not to expect additional cuts before February.

Analysts at Merrill Lynch said that while Intel showed better-than-expected performance, they were cautious about a seasonally slower first quarter of 2003, when investors will be paying more attention to the value of Intel's stock price, which the firm believes is high. But Merrill Lynch said it believes Intel will continue to perform well in the server, desktop, notebook and flash memory markets.