Paul and thread,
Here's the WSJ story.
interactive.wsj.com
Barry
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July 13, 1999
Intel Misses Analysts' Estimates,
Predicts 'Slightly' Better Revenue
An INTERACTIVE JOURNAL News Roundup
Intel Corp. late Tuesday reported net income for its latest period that narrowly trailed analysts' estimates, but said revenue for the current quarter would be "slightly" better on a sequential basis.
For the fiscal quarter ended June 26, the Santa Clara, Calif., chip maker reported net income of $1.75 billion, or 51 cents a diluted share, compared with $1.17 billion, or 33 cents a diluted share, in the year-ago period. That trailed the consensus estimate of analysts surveyed by First Call for net income of 53 cents a share.
Revenue, meanwhile, climbed 14% to $6.75 billion from $5.93 billion in the year-ago period.
"As expected, second-quarter revenue reflected a seasonal slowdown," said Craig R. Barrett, Intel's president and chief executive officer, adding that "we look forward to a strong second half."
Intel had warned in April that second-quarter revenue would be flat or slightly down from the first period because of normal seasonal factors.
Intel said it expects third-quarter revenue to be up slightly from the second quarter, while gross-margin percentage is expected to be up slightly from the 59% in the second quarter. For the full year, Intel now expects gross margins to be around 60%, up from prior guidance of around 57%.
Intel said the expected improvement in gross margins reflected the impact of steps taken to cut costs and make manufacturing more efficient, an effort made in an attempt to diminish the effect of falling PC prices. Analysts had differed over the effectiveness of the strategy.
Investors' first reaction to Intel's forecast for the third quarter was one of mild disappointment; the chip giant's shares dipped to $65.25 in after-hours dealings soon after closing at $65.375 on the Nasdaq Stock Market. But the shares then rebounded to $66.50.
Intel had been expected to be conservative in its outlook; the third quarter tends to be loaded with sales made very late in the period. The third quarter is traditionally stronger than the second quarter because of a seasonal upswing in PC sales.
Intel's dominance of the PC-chip market has been shaken by a combination of factors: the rise of sub-$1,000 PCs, a less-profitable category that the chip maker had traditionally eschewed, and the failure of compelling new PC functions to emerge that would push consumers to buy higher-end machines that need the more profitable, top-of-the-line chips Intel consistently delivers before its rivals. That one-two punch left Intel struggling to stop the erosion of its market share. But the company has regained its momentum of late, cutting costs and slashing low-end chip prices even as it pushed into the higher-end workstation and server markets in a bid for more profits.
The effects have been clear. Intel's dark-horse rival, Advanced Micro Devices Inc., warned last month that pressure from Intel would result in a huge loss for the quarter. And National Semiconductor Corp. conceded defeat in the chip war with its decision to sell its Cyrix microprocessor unit to Taiwan's Via Technologies Ltd. |
