Intel posts 43% jump in profit, sets more job cuts

Longtime CFO Bryant is replaced by an aide as part of his move to new post

SAN FRANCISCO (MarketWatch) -- Intel Corp., the world's No. 1 chipmaker, reported a 43% increase in third-quarter profit Tuesday, benefiting from a robust personal-computer market, but also announced plans to shed 2,000 more jobs as part of a continued reduction in staff.

The Santa Clara, Calif.-based semiconductor maker (INTC:Intel Corporation
INTC 25.48, -0.27, -1.0%) also named Stacy J. Smith as its new chief financial officer, replacing Andy Bryant, in what one analyst said was an expected transition in the company. Smith, currently a deputy CFO, will report to Bryant, who was promoted to chief administrative officer.

Shares of Intel, a component of the Dow Jones Industrial Average, rose more than 4% in after-hours trading following the report.

"It was not a surprise to the investment community," analyst John Dryden of Charter Equity Research said of Bryant's new post. "I believe it has been a known transition that was coming. It was just a matter of timing."

Noting that Bryant is the company's longest-serving CFO having started in 1994, Dryden said, "It's just time for new blood. I would say it was a planned change. It was not based on Andy's performance."

Intel also set in motion more staff cuts, saying it would shed 2,000 jobs in the fourth quarter, reducing the company's head count to about 86,000. That's down about 9% from where it stood in the end of 2006.

The company reported profit of $1.9 billion, or 31 cents a share, for the period that ended Sept. 29 compared to $1.3 billion, or 22 cents a share, for the comparable period last year.

On Wall Street, analysts on average estimated Intel would earn 30 cents a share, according to a Thomson Financial survey.

Revenue grew to $10.1 billion compared to $8.74 billion in the same period last year. Analysts were expecting revenue of $9.6 billion.

Intel exceeded its own higher revenue projections of between $9.4 billion to $9.8 billion. It also projected fourth quarter revenue to be between $10.5 billion and $11.1 billion, higher than the $10.4 billion predicted by analysts.

Analyst Doug Freedman of American Technology Research said the chipmaker offered "very strong" fourth-quarter earnings projections.

"This should push next year's numbers higher, as the gross margin starting point is higher and ripples through the model," he added.

Analyst John Dryden of Charter Equity Research said "PC demand continues to exceed expectations globally ... The mix to mobile is providing an added benefit to Intel."

Noting Intel's projected 57% gross margin for the fourth quarter, Dryden said: "I was bullish, but didn't target 57% gross margin until [the second half of 2008]." He said this suggests that Intel is gaining share in the market for server microprocessors.

In a written statement, Chief Executive Paul Otellini cited "a combination of great products, strong and growing worldwide demand, and operational efficiency" as the key factors for the growth seen in the quarter. The company said its performance was driven by growth in chips for laptop and other mobile devices, along with the corporate market.

Last month, Intel raised its revenue projection to between $9.4 billion to $9.8 billion, from a previous range of $9 billion to $9.6 billion.

Intel is the No. 1 chipmaker in the world, with about 13% of the industry's total revenue in 2006, followed by Samsung Electronics with 8%, and Texas Instruments Inc.