Old apple computer

Byline: Cynthia L. Webb

Break out the champagne and renew your E-trade account. If Intel 's latest quarterly numbers are any indication of things to come, recovery for the much-battered technology sector is on the horizon.

Yesterday, the microchip giant reported that its net income for the third quarter more than doubled. Earnings totaled nearly $1.7 billion (25 cents a share) for the quarter, compared with $686 million (10 cents) in the year-ago period. Intel said it logged $7.8 billion in revenue, compared with $6.5 billion in the same quarter last year. Overall, the company beat analysts' expectations by 2 cents a share.

But Intel didn't let its strong quarterly results change its overall tune on the economy. "We are not looking at the U.S. and saying, my God, the good times are here," chief financial officer Andy Bryant said, as quoted by The San Jose Mercury News. "There may be some more laptop buying, there are signs of some evidence, but no overwhelming rush to increase IT budgets." * The San Jose Mercury News: Intel Sees Earnings Surge

Intel's positive results caused the company's stock to steadily climb in after-hours trading last night, and a number of Wall Street firms upgraded their ratings. "Intel is likely to set the tone for [today's] session after it reported a 20 per cent rise in third-quarter revenues compared to last year. It went on to forecast better figures for the fourth quarter thanks to healthy PC sales," The Financial Times reported. * The Financial Times: Intel To Set The Tone On Wall Street

Even though Intel was bashful about its results, The San Francisco Chronicle said the company's third quarter "results add to the mounting evidence that a high-tech recovery is firmly under way. Intel's third-quarter revenue growth was among the best in recent memory," Bryant told analysts yesterday. And The Wall Street Journal noted that "Intel's results come despite continued weakness in corporate technology spending, particularly in the U.S., as well as new competing chips and challenges in moving to a new manufacturing process."

Computer sales helped drive the company's successful quarter, along with overseas sales. "The profit was driven by Intel's microprocessor group, which supplies the electronic brains of more than 80% of the world's personal computers. The company reported record shipments of processors, chipsets and motherboards. Much of the demand was from developing countries such as Russia, India and China, Chief Financial Officer Andy Bryant said," according to The Los Angeles Times. Intel's chief executive, Craig Barrett , had this to say in a statement about some of the reason for the company's financial success: "Our resolve to invest aggressively during the downturn is paying off with double-digit revenue growth and a doubling of profit compared to a year ago." * The Wall Street Journal: Intel's Earnings Soar With PC Chip Demand (Subscription required) * The Los Angeles Times: Intel Says Quarterly Profit Doubles (Registration required) * The San Francisco Chronicle: Intel Profit Soars In 3rd Quarter

The company expects even more sales for its fourth quarter (perhaps the "R" word will come out then?). "The company estimated fourth-quarter revenues of between $8.1 and $8.7 billion. By comparison, the consensus analyst estimate was $8.32 billion," The Associated Press reported. "Intel's results also have benefited from the stability of microprocessor prices and relative weakness among competitive offerings. Analysts say Intel has been growing its market share in the absence of strong offerings elsewhere." * The Associated Press via The San Jose Mercury News: Intel Q3 Earnings More Than Double

A Few Reasons for Pessimism

An analyst interviewed by The New York Times managed to find some rough edges in Intel's latest results. Sanford Bernstein 's Adam Parker "said that the company's shift to chips for notebook PC's, which are typically priced higher than those for desktop units, certainly helped to fuel the growth. He added, however, that some of the strength in the third quarter could be attributed to consumers in China delaying purchases in the second quarter because of the outbreak of severe acute respiratory syndrome, or SARS," the article said. The Wall Street Journal said Intel "stands to face greater competition in the current quarter, with new chips from rivals that include Advanced Micro Devices Inc. and Transmeta Corp. " The Journal also noted that the "worst mark on Intel's report card comes from flash memory, a kind of data-storage chip favored in phones and some other portable-computing products. Intel's revenue from the segment that includes flash chips fell 23% from the year-earlier period." * The New York Times: Intel Says Net Doubles, With Sales Up Overseas (Registration required)

And CNET's News.com noted that "the arrival of Intel's next generation of Pentium processors in PCs is up in the air and could come later than the fourth-quarter debut that was expected. The new chips are unlikely to be available in large numbers of computers until January or February, due in part to last-minute changes made by Intel, several analysts said this week." * CNET's News.com: Intel's Quarter Tops Expectations

A Biotech Boom in the Making Too?

A number of biotech companies are waiting at the IPO gates, and venture capital investors are eyeing the sector once again. Today's San Francisco Chronicle reports: "Biotechnology leaders are cautiously celebrating the end of a two-year financial slump this autumn as more than a dozen companies line up to go public and the latest class of young startups shows its stuff to potential venture capital partners at a conference in San Francisco today and Thursday." According to the newspaper, biotech industry officials "have reason to be optimistic. Biotech stock indexes have risen sharply this year, the Food and Drug Administration has a new leader and a stepped-up drug approval rate, and Genentech Inc. of South San Francisco single-handedly boosted confidence in the sector with positive results in a cancer drug trial in June." * The San Francisco Chronicle: High Hopes For Biotech Companies

The Financial Times also writes that the tide is changing for biotechs. "There are 15 biotechnology companies waiting in the queue, according to BioWorld , a research group -- more than at any time since the biotechnology boom of 2000. 'There's a sense the window is opening up,' says Harry Tracy , an independent sector analyst," the newspaper reported. "Biotechnology companies are looking to raise a total of $1.07bn through initial market offerings. While that is a far cry from 2000 when 82 companies raised a record $7bn, it would still be the best showing the sector has seen since." * The Financial Times: Biotechnology Sector Shows Signs of Life

Apple's iTunes Expands

San Francisco commuters have been able to gaze at new hyper-colored billboards for Apple Computer 's iTunes music service flanking the freeways into downtown. The new advertisements are part of the computer maker's plans tomorrow to launch its Windows version of the popular iTunes music store. The Associated Press notes that with the launch, Apple "will join a growing list of rivals, including Napster , MusicMatch , Rhapsody , and soon also Dell , America Online and Amazon " who are offering the Windows-based pay-for-play service. "Apple officials would not discuss details of the launch, but analysts and record industry sources expect the Windows rendition to mirror the successful Macintosh version that kick-started the latest influx of legal song download services," the AP said.

Meanwhile, Apple will Webcast its fourth-quarter results today after the market's close. * The Associated Press via washingtonpost.com: Apple To Unveil Windows Online Music

Internet Porn Law Up for Review ... Again

The U.S. Supreme Court often likes to sidestep prickly First Amendment issues. But the nation's highest court said yesterday it would make a decision about a challenge to the 1998 Child Online Protection Act , a federal law that would penalize business Web sites for allowing pornography to be available to children. "Congress has been determined to try to shield children and teenagers from pornography on the Internet. But so far, free-speech advocates have succeeded in wielding the 1st Amendment as a shield against federal enforcement. The new case, to be heard in February, will be the third time the high court has reviewed such measures. In each instance, the same problem has arisen. Protecting computer-using minors from explicit sex has the effect of limiting, to some degree, what is available to adults. And according to the lower courts, that limitation of the rights of adults violates the 1st Amendment," The Los Angeles Times reported. * The Los Angeles Times: Justices Rethink Pornography (Registration required)