Strength in PCs leads Intel to raise Q3 revenue guidance

by Ben Pena September 21, 2016, 1:23

That trend is why people may be a little surprised by Intel's decision Friday to raise its projections for quarterly revenue, thanks to improved demand for PCs.

Intel also noted some signs of improving PC demand.

Shares of chip-based companies remain strong on Friday after Intel Corporation (NASDAQ: INTC) boosted its revenue outlook for the third quarter.

Third-quarter R&D plus MG&A spending is expected to be $5.2 billion, $100 million above prior guidance.

Intel forecasts the mid-point of its third-quarter GAAP gross margin range at 62 percent, plus or minus a couple of points.

Shares traded 2.6% higher at $37.49 late on Friday.

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PC shipments continued their steady decline of the past two years in the second quarter, research firms International Data Corp. and Gartner Inc. said in July, but the declines were less severe than in recent periods. But both firms said that shipments rose in the USA market.

IBD'S TAKE: Intel stock is at long-time highs but is still rated just ninth on the IBD-Semiconductor Manufacturing group (and that doesn't even include fabless chipmakers). Now, Intel is seeing signs of "replenishment of PC supply chain inventory", indicating that PC makers are stocking up on key components for computers after years of sliding sales that left hardware gathering dust on shelves.

Meanwhile, Intel has slashed head count to adjust to weaker sales growth and free up cash to invest in newer businesses.

Intel is set to report its third-quarter results on October 18.

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