Intel 2nd-Qtr Profit Falls as Chip Demand Withers (Update3)
2001-07-17 17:51 (New York)
Intel 2nd-Qtr Profit Falls as Chip Demand Withers (Update3)
(Adds investor comment in fourth paragraph.)
Santa Clara, California, July 17 (Bloomberg) -- Intel Corp.,
the biggest chipmaker, said second-quarter profit fell and sales
declined as personal-computer makers bought fewer processors and
prices fell.
Net income plunged 94 percent to $196 million, or 3 cents a
share, from $3.14 billion, or 45 cents, a year earlier. Sales
dropped 24 percent to $6.33 billion from $8.3 billion. Excluding
certain costs, profit in the recent period beat analyst forecasts.
Intel last month said demand for PC chips was becoming more
stable, while sales of communications chips were weaker than
expected. Today, Intel said third-quarter sales will fall to
$6.2 billion to $6.8 billion. Analysts predict the company will
talk on a conference call about declining PC-chip prices and
express caution about when other markets will pick up.
``There's not a lot of demand for new computers,'' said DeAnne
Steele, who co-manages the $550 million BNY Hamilton Large Cap
Growth Fund at Bank of New York. The fund owns about 421,000 Intel
shares. ``Until companies see that the economy is turning, they're
not going to increase their spending.''
The Santa Clara, California-based chipmaker's net income
includes investment gains and acquisition-related costs. Excluding
the costs, profit would have been $854 million, or 12 cents a
share. On that basis, profit was expected to be 10 cents, the
average estimate in a First Call/Thomson Financial analyst survey.
Those figures don't meet generally accepted accounting principles.
Intel shares slipped to about $29.10, then recovered to
$29.50, after the report. They had gained 77 cents to $29.90 in
regular U.S. trading before the release. The stock has lost more
than half its value in the past 12 months.
Profit in the recent quarter includes a $3 million gain from
the sale of investments in Intel's venture-capital arm, compared
with an investment gain of $2.1 billion in the year-earlier period.
PC Chips
Intel said unit shipments of PC processors rose 6 percent
during the quarter from the previous period, and Chief Financial
Officer Andy Bryant said that supports the company's prediction for
a rebound in the PC market in the second half. Average selling
prices for microprocessors fell from the first quarter.
Sales of flash-memory chips, which store data when devices
such as cell phones are switched off, were weaker than expected, he
said. Flash demand will rebound this year, and it's still too soon
to say when sales of communications chips will improve, Bryant
said.
Analysts polled by First Call expect sales of $6.51 billion
for the current period. In the third quarter of 2000, the company
had revenue of $8.73 billion.
The company reduced its forecast for research and development
spending for the year to $4 billion from $4.2 billion. Intel still
plans to spend $7.5 billion in 2001 on capital improvements,
including new plants.
(Intel will broadcast a conference call with analysts at
intc.com at 2:30 p.m. California time to discuss the
results.)
--Cesca Antonelli in the San Francisco newsroom at (415) 743-3532
or at fantonelli@bloomberg.net, with reporting by William Selway
and Michael Lovell/jac/*dfr
Story illustration: For a chart of Intel's recent sales by
geographic region, see {INTC US <Equity> DES7 <GO>}.
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