Intel's Good News: 3Q Was FlatIntel's Good News: 3Q Was Flat

Intel painted a bleak picture Tuesday when it reported $6.5 billion in revenue for the third quarter--essentially flat compared to a year ago. The company still plans to lay off another 4,000 employees by year's end. That kind of cost-cutting is helping the bottom line, at least. Intel reported $686 million in profit for the quarter ended Sept. 28, a fivefold increase over the $106 million reported a year ago.

The world's top chipmaker reported increased shipments of microprocessors, chipsets, and Ethernet-connectivity and flash-memory units. Shipments on the motherboard side of its business were flat, though. Flash memory, in particular, was a bright spot, thanks largely to demand for this technology in color-screen and picture-taking cell phones. In fact, to capitalize on growth in such phones, Intel has disclosed several advances in memory and processing technologies designed to improve battery life, performance, and storage in cell phones.

During the third quarter, Intel introduced 18 microprocessors produced using the company's 0.13-micron manufacturing process, which creates lower-voltage, more-efficient chips for portable devices. Monday, Intel introduced its ultra-low-voltage Celeron chip, a processor for small devices that run embedded-computing apps such as handhelds used in factories.

Intel's outlook for the fourth quarter is conservative, to say the least. The company expects sales of $6.5 billion to $6.9 billion and flat R&D spending of $2.1 billion. Says CFO Andy Bryant, "We're just not seeing the demand pick up we'd like to see, and we hit the wall in terms of the cost savings we'd like to see."