Intel Restructuring May Pay Off Greater Than Anticipated

With today being AMD's turn at the center stage spotlight, Intel is doing its best to keep its brand presence and its recent performance gains - both in terms of hardware and finances - in the public mind. For once, a company that may have spent more of its history restructuring than being well-structured may be finally experiencing some payback time, as Intel announced this morning it is dramatically upgrading its third quarter revenue forecast.

During its last fully completed fiscal quarter, Intel's revenue was already up 8% over the same quarter in the prior year, with $8.7 billion. In late July, it forecast revenue for this quarter (which ends at the close of September) at between $9.0 and $9.6 billion.

Investors were looking at the low end of that forecast. But today, the company is raising that outlook to between $9.4 and $9.8 billion - a narrower window, which means investors might want to look at the high end of that scale.

This as the company continues to forecast gross margin of 52%, which will be back to where investors want it to be - last quarter, it dipped to 46.9%.

What does that mean? Assuming a medium-case scenario and a healthier 52% gross margin, assuming research and other expenses stay roughly the same percentage of revenue, Intel could end up with a $1.56 billion quarterly profit - about 17.6% better than the company's third fiscal quarter of 2006.

Assuming that happens, analysts would likely credit two factors: a rebound in flash memory sales, which had been going way down south; and higher-than-anticipated demand for quad-core processors.

In a separate announcement today, Intel said it will stop taking orders for 65 nm Core 2 Duo and Core Solo processors on October 31, in order to make way for its Penryn 45 nm generation come November.