INTC ($15-$13-$14)..PE=50....misses by 2 cents...gloomy outlook...
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15-Oct-02
16:19 ET Intel misses by 2 cents (INTC) 16.52 +1.42: Reports Q3 (Sep) earnings of $0.11 per share, $0.02 worse than the Multex consensus of $0.13; revenues fell 0.6% year/year to $6.50 bln vs the $6.50 bln consensus.
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15-Oct-02
16:22 ET Intel guides Q4 revs below consensus, cuts 2002 capex & gross margin forecast (INTC) 16.52 1.42: -- Update -- Expects Q4 rev to be $6.5-$6.9 bln, vs consensus of $6.9 bln, and expects 2002 capex to be about $4.7 bln, lower than the previous expectation of between $5.0-$5.2 bln. Gross margin for 2002 is expected to be about 49%, near the low end of the previous expectation of 51%.
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15-Oct-02
16:27 ET Intel capex cut driven by construction savings (INTC) 16.52 +1.42: -- Update -- It's notable that Intel says the majority of its capex reduction is due to cost savings with ongoing construction projects; Intel noted on its last earnings conference call that it could drive capex savings through savings on construction projects, and that appears to be the case here. There is an important distinction between capex savings due to reduced investment in new semi equipment and due to construction savings. The news here is not as bad for semi equip cos as it appears at first glance.
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15-Oct-02
16:32 ET Intel's Q4 guidance (INTC) 16.52 +1.42: -- Update -- Using the midpoint of Intel's Q4 revenue guidance, we arrive at an EPS estimate of roughly $0.12; the current consensus is $0.16.
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15-Oct-02
16:43 ET Intel: CFO sees "soft demand in end mkts", Q4 PC demand at low end of forecast (INTC) 16.52 +1.42: -- Update --
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15-Oct-02
17:53 ET Intel (INTC) 16.52 +1.42: -- Update -- On call, management's prepared remarks pretty much follow text of press release... did note that corporate purchasing remained weak in Q3 in the mature markets of Europe and that Asia-Pacific region set new revenue record for quarter with China achieving 39% yr/yr revenue growth... INTC -1.91 at 14.61
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15-Oct-02
18:01 ET Intel expects to bring inventories down some in Q4 (INTC) 16.52 +1.42: -- Update -- In Q&A portion of call, says it expects to bring inventory down a little bit in Q4, which should take some pressure off underutilization charges... INTC -1.99 at 14.53
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15-Oct-02
18:10 ET Intel hit wall in terms of cost savings (INTC) 16.52 +1.42: -- Update -- On call, says it is seeing a situation where it's just not seeing demand pick up and that it hit a wall in the way of cost savings, which was the biggest factor behind the disappointing margin performance in Q3... says margin improvement going forward will have a lot to do with demand... INTC -2.08 at 14.44
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15-Oct-02
18:15 ET Intel not claiming more visibility (INTC) 16.52 +1.42: -- Update -- On call, analyst suggests tighter revenue range for Q4 implies better visibility... Management says it is hard to claim it has more visibility and attributes tighter revenue range to fact that Q4 is less back-end loaded and is the most linear quarter of its year... INTC -2.13 at 14.39
Reuters Market News
Intel's 3rd-qtr earnings rise vs dismal year-ago
Tuesday October 15, 8:51 pm ET
By Duncan Martell
(Adds additional analyst comments, investor comments, details from conference call)
SAN FRANCISCO, Oct 15 (Reuters) - Intel Corp. on Tuesday (NasdaqNM:INTC - News) posted higher third-quarter earnings but cautioned that revenue for the holiday sales-driven fourth quarter would be lower than Wall Street had expected, saying there was no sign yet of a recovery in the personal computer industry.
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Intel shares fell as much as 14 percent after the earnings report, as the chipmaker posted per-share earnings below consensus estimates and forecast fourth-quarter revenues below current Wall Street expectations.
Intel forecast fourth-quarter revenue of between $6.5 billion and $6.9 billion, implying sales ranging from flat with the third quarter to up by about 6 percent -- far less than 10 percent to 15 percent increase that is typical for Intel and the personal computer industry. In last year's fourth quarter, Intel posted revenue of $6.98 billion.
In addition, Intel lowered its capital spending budget for the year to about $4.7 billion, lower than the previous expectation of $5.0 billion to $5.2 billion. That sent shares of chip-equipment companies, such as Applied Materials Inc. (NasdaqNM:AMAT - News), tumbling in after-hours trading.
"They're still waiting for a recovery and have not seen it," said Hans Mosesmann, an analyst at Prudential Securities. "This is bad news and worse than a lot of people were expecting."
SOFT MARKET MEANintelS LOWER EARNINGS
Shares of Intel fell as low as $14.25 in trading after the close of regular U.S. trading, after rising $1.42 to $16.52 during regular trade on Nasdaq. Intel shares are down by almost 50 percent this year.
"As long we have a soft market, earnings are going to be lower than we would like," said Andy Bryant, Intel's chief financial officer, in an interview. "The economy is still not recovering in our industry."
Santa Clara, California-based Intel said net income rose to $686 million, or 10 cents per share, from $106 million, or 2 cents per share, a year ago. Revenue fell slightly to $6.5 billion, compared with $6.55 billion.
Excluding one-time acquisition-related costs of about $108 million, Intel said it earned 11 cents a share. On that basis, analysts had forecast Intel to earn 13 cents a share, within a range of 10 cents to 14 cents, on revenue of $6.52 billion, according to Thomson First Call.
Intel said the majority of its planned capital spending reduction came from cost-savings. The company said it would slightly reduce such investment in the fourth quarter by reusing some equipment.
"With demand being mediocre for so long, Intel now is to the point where cutting capital spending again is fairly major in that many were estimating an annual spending run-rate of $5.6 billion at the beginning of the year," said Justin McNichols, portfolio manager at San Francisco-based Osborne Partners Capital Management.
Intel said its gross margin in the fourth quarter would be 49 percent and it cut its forecast for gross margin for all of 2002 to the same 49 percent. Intel had earlier held steady a forecast for a gross margin of 51 percent, "plus or minus a couple of points," in 2002 despite softening revenue.
"The margin guidance they gave in early September was disastrous," Lehman Brothers analyst Dan Niles said. "When you think about it, higher gross margin on lower revenue just doesn't make sense."
MARKET SHARE GAINS AT AMD'S EXPENSE
Advanced Micro Devices Inc. (NYSE:AMD - News), Intel's principal rival in the market for microprocessors that are the "brains" of PCs, warned on Oct. 2 that its third-quarter revenue would be 18 percent below Wall Street expectations at the time, leading to a large operating loss. AMD cited a weak PC market and a build-up of chips at PC makers, and analysts cited bruising competition with Intel.
Advanced Micro is scheduled to report its second-quarter financial results on Wednesday after U.S. markets close.
On a conference call with analysts, Intel's President and Chief Operating Officer Paul Otellini said Intel gained about 3 points of market share to a four-year high, principally in the market for desktop PCs, where its Pentium 4 processors gained ground against AMD.
Intel had in early September tightened its projected revenue range for the third quarter to $6.3 billion to $6.7 billion compared with its previous projection of $6.3 billion to $6.9 billion, reassuring investors at the time that the beleaguered PC industry was not getting far worse.
With a few notable exceptions such as Dell Computer Corp.(NasdaqNM:DELL - News), the PC industry is having a bad year, with some analysts calling for flat sales in 2002, following a dismal 2001, when year-over-year sales fell for the first time since the mid-1980s. Analysts and market research firms have steadily ratcheted down estimates for 2002 worldwide shipments of PCs. |
