In a stark contrast to conservative projections by analysts, Intel (stock: INTC) announced that the company achieved a revenue of $10.22 billion, beating the estimates. Chipzilla achieved clear two billion dollar profit in Q3’08, or 35 cents per share.
The reason for this 12% jump in profits is no other than Intel Atom, chip that reportedly costs only $8 to make, giving Intel additional $200 million in its Q3 revenue. Without Atom and associated chipsets, their revenue would dip below 10 billion. This only goes to show that Intel executed properly and went for the segment of market that has just started to expand. Cheap notebooks (netbooks) are a sales hit, and the companies that invested in them are now reaping profits. ASUS’s EEE (triple E) became a household brand, while Aspire One helped Acer to overtake Dell and HP in notebook market.
When you compare this move to AMD’s political decision to practically exit the market the company actually created – anybody remembers Alchemy and Geode, and more important, OLPC nettop? It is no wonder that AMD needed “asset smart” strategy. For AMD’s good, that strategy better include getting rid of “the sludge”.
Going back to Intel, the company issued a wide outlook for the actual quarter and 2009. For Q4, results may be in 10.1-10.8 billion range, depending on how the world economic crisis will resolve. One of measures will be cutting the R&D expenses in 2009 – by around 100 million. But still, this industry is far from saturation. The world economy may be bleeding, but one thing is certain – we need chips. A lot of ’em. Thus, both AMD and Nvidia might pull a surprise with their Q3 earnings as well.
AMD (stock: AMD) reports on Thursday, Nvidia (stock: NVDA) is yet to announce the Q3 results call.
