Intel, Oracle See Earnings Growth
The technology sector could get a boost Friday following an upbeat earnings forecast Thursday from Intel and better-than-expected earnings from Oracle Corp.
Chip giant Intel Corp. expects third quarter revenues to beat analysts' expectations on the strength of better-than-expected demand in the U.S. and Europe. The news sent Intel shares up 5 in after-hours trading Thursday.
The report, issued after markets closed Thursday, couldn't have landed at a better time for the beleaguered technology stocks, with the Pacific Stock Exchange index of tech blue chips ending down ($PSE) 1.7 percent and steep losses across the broader market on Asian and Latin American turmoil.
Intel (INTC) said in July that it had expected third quarter revenue flat to slightly higher than the $5.9 billion seen in the second quarter this year. But now Intel thinks revenue could come in 8-10 percent higher.
Analysts like Scott Randall at SoundView Financial credit the surprisingly higher revenue at Intel to stronger PC sales-through to the customers and that PC makers are beginning to replenish low inventory levels.
"The inventory refill that's occurring is what's helping the top line sales this quarter," he said. "The PC manufacturers had taken their inventories down to pretty low levels, so this is a positive aspect."
Moreover, the guidance from Intel suggests average sales prices have started to stabilize. And, that's "a rising tide for a period for all the component suppliers," Randall added.
Intel said it expects revenue in the second half of the year to be greater than the first half. Intel's stock Thursday closed down 2 3/16 to 79 1/16. Other chip makers were also lower. National Semiconductor Corp. (NSM) was down 5/16 at 8 15/16 and Analog Devices (ADI) fell 13/16 to 14 3/16.
Intel did not give any direct guidance on per share earnings expectations in the report.
Oracle Corp. (ORCL) posted a first-quarter net income of $195 million, or 20 cents a share, compared to the year ago total of $150 million, or 15 cents a share.
Analysts polled by First Call expected a profit of 16 cents a share.
Revenue for the quarter increased 28 percent to $1.7 billion from $1.4 billion in the year-ago period. Oracle's database business grew 25 percent to $1.3 billion and its applications business grew by 37 percent to $500,000.
Product related revenues grew by 19 percent, compared to the year-ago total, led by strong growth in database products. Oracle's Education and Consulting services revenue grew by 48 percent during the quarter.
Oracle Americas led revenue growth, up 37 percent, followed by Europe, Middle East and Africa as a whole, up 33 percent compared to the year ago figures.
Oracle said its database business continues to grow, with outstanding results in the U.S. and Europe.
Shares fell 3 7/8 to close at 23 7/8 Thursday.