Some Intel comments: flash memory cited as weaker than expected, but MMX very strong (would affect IOM more)
Intel earnings
Intel Corp. (Nasdaq: INTC) said Tuesday that for the third quarter 1997
net income was $1.57 billion, up 20 percent from third quarter 1996 net
income of $1.31 billion. Earnings per share in the third quarter rose to $0.88
from $0.74 in the third quarter of 1996, an increase of 19 percent. A poll of
analysts by Zacks estimated $0.91 per share. Earnings per share in the third
quarter were down 4 percent from $0.92 in the second quarter of 1997,
primarily the result of a much weaker than expected Flash memory market
segment. Third quarter revenue was $6.2 billion, up 20 percent from $5.1
billion for the third quarter of 1996.
"The quarter saw a lot of our energy going into product conversions as the
Pentium processor with MMX technology continued to ramp and we accelerated
shipments of the Pentium II processor with its novel high performance bus
architecture," said Andrew S. Grove, chairman and CEO.
In the third quarter, the company repurchased a total of 2.5 million
shares of Common Stock at a cost of $251 million under an ongoing program.
And this over the dow:
SANTA CLARA, Calif., Oct. 14, 1997 -- Driven by both solid demand in North
America and rapid market acceptance of its newest processors, the Pentiumr
processor with MMXT technology and the Pentiumr II processor, Intel Corporation
set a record for unit shipments of microprocessors in the third quarter, the company
said today. Intel's transition to processors with MMX media enhancement technology
accelerated during the quarter with well over half of the company's shipments of
microprocessors coming from processors with MMX technology.
Third quarter revenue was $6.2 billion, up 20 percent from $5.1 billion for the third
quarter of 1996. Third quarter revenue was up 3 percent from second quarter 1997
revenue of $6.0 billion.
Net income in the third quarter was $1.57 billion, up 20 percent from third quarter
1996 net income of $1.31 billion, and down 4 percent from second quarter 1997 net
income of $1.65 billion.
Earnings per share in the third quarter rose to $0.88 from $0.74 in the third quarter of
1996, an increase of 19 percent. Earnings per share in the third quarter were down 4
percent from $0.92 in the second quarter of 1997, primarily the result of a much
weaker than expected Flash memory market segment.
"The quarter saw a lot of our energy going into product conversions as the Pentium
processor with MMX technology continued to ramp and we accelerated shipments of
the Pentium II processor with its novel high performance bus architecture," said Dr.
Andrew S. Grove, chairman and chief executive officer. "Our factories were especially
responsive to the challenges presented by this rapid conversion, by meeting our volume
needs with excellent yields of advanced processors."
In the third quarter, the company repurchased a total of 2.5 million shares of Common
Stock at a cost of $251 million under an ongoing program. Since the program began in
1990, the company has repurchased 200.7 million shares at a total cost of $5.9 billion.
During the quarter the company announced its regular quarterly cash dividend of $0.03
per share. The dividend is payable on December 1, 1997 to stockholders of record on
November 1, 1997. Intel has paid a quarterly dividend for the last 5 years.
Intel's 1998 Step-Up Warrants (INTCW) expire on March 14, 1998. The warrants
must be exercised on or before Friday, March 13, 1998. The last day of trading of the
warrants on the NASDAQ Stock Market will be March 10, 1998.
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are
forward-looking and actual results may differ materially. These statements do not take
into account the potential effects of future mergers or acquisitions.
** The company expects revenue for the fourth quarter of 1997 to be slightly up from
third quarter revenue of $6.2 billion. ** Gross margin percentage in the fourth quarter
is expected to be flat to slightly up from 58 percent in the third quarter. In the
short-term Intel's gross margin percentage varies primarily with revenue levels and
product mix.
** The company still believes that over the long-term the gross margin percentage will
be 50 percent plus or minus a few points. Intel's long-term gross margin percentage
will vary depending on product mix.
** Expenses (R & D plus MG &A) in the fourth quarter are expected to be
approximately 10 to 15 percent higher than expenses of $1.3 billion in the third
quarter, primarily as the result of seasonal spending on advertising and marketing.
Expenses are dependent in part on the level of revenue.
** R & D spending is expected to be approximately $2.4 billion for 1997.
** The company expects interest and other income for the fourth quarter to be
approximately $160 million, assuming no significant changes in cash balances or
interest rates and no unanticipated items.
** The tax rate in 1997 is expected to remain at 35.5 percent.
** Capital spending is expected to be approximately $4.5 billion for 1997.
Depreciation is expected to be approximately $2.2 billion for 1997.
The above statements contained in this outlook are forward-looking statements that
involve a number of risks and uncertainties. These statements do not take into account
the potential financial effects of future mergers or acquisitions, including any one time
charges, and related operational risks such as the company's ability to successfully
integrate any acquired businesses, enter new market segments and manage the growth
of such businesses.
In addition to the factors discussed above, among the other factors that could cause
actual results to differ materially are the following: business conditions and growth in the
computing industry and in the general economy; changes in customer order patterns,
including timing of delivery and changes in seasonal fluctuations in PC buying patterns;
changes in the mixes of microprocessor types and speeds, motherboards, purchased
components and other products; competitive factors, such as rival chip architectures
and manufacturing technologies, competing software-compatible microprocessors,
acceptance of new products and response to price pressures; risk of inventory
obsolescence due to shifts in market demand; variations in inventory valuation; excess
or shortage of purchased components; timing of software industry product
introductions; continued success in technological advances and their implementation,
including the manufacturing ramp; development, implementation and initial production
of new strategic products and processes; excess or shortage of manufacturing
capacity; unanticipated costs or other adverse effects associated with processors and
other products containing errata (deviations from published specifications); risks
associated with foreign operations; litigation involving intellectual property and
consumer issues; level of stock repurchases; and other risk factors listed from time to
time in the company's SEC reports, including but not limited to the report on Form
10-Q for the quarter ended June 28, 1997 (Part I, Item 2, Outlook section). |
