Intel Reports Second-Quarter Results; Second-Quarter Earnings Per Share $0.07;
Earnings Excluding
Acquisition-Related Costs $0.09 Per Share
Business Editors/High-Tech Writers
SANTA CLARA, Calif.--(BUSINESS WIRE)--July 16, 2002--
Charges Related to Online Services and
Wireline PC Card Businesses Included
Intel Corporation today announced second-quarter revenue of $6.3
billion, down 7 percent sequentially and approximately flat
year-over-year.
Second-quarter net income was $446 million, down 52 percent
sequentially and up 128 percent year-over-year. Earnings per share
were $0.07, down 50 percent sequentially and up 133 percent from $0.03
in the second quarter of 2001. The results include a $106-million
charge to cost of sales related to the decision to wind down Intel(R)
Online Services, along with a $112-million write-off of acquired
intangibles, primarily related to Xircom PC cards for wireline
networking. In accordance with generally accepted accounting
principles (GAAP), the 2001 results reflect charges for the
amortization of goodwill, which is no longer amortized in the current
year with the adoption of FASB rule 142.
Second-quarter net income excluding acquisition-related costs(1)
was $620 million, down 39 percent sequentially and down 27 percent
year-over-year. Earnings excluding acquisition-related costs were
$0.09 per share, down 40 percent sequentially and down 25 percent from
$0.12 in the second quarter of 2001. These results include the impact
of the $106-million charge related to the online services business.
Acquisition-related costs during the quarter consisted of $14
million in one-time charges for purchased in-process research and
development, and $229 million in amortization of acquisition-related
intangibles, write-off of intangibles and other costs. Intel expects
to continue to report earnings excluding acquisition-related costs
through the end of the year to provide a consistent basis for
financial comparisons.
"In a tough environment, we continued to execute well," said Craig
R. Barrett, Intel chief executive officer. "Our investments in
technology and manufacturing are delivering processors with clear
performance leadership, resulting in market segment share gains across
the board. We also saw growth in our communications businesses, led by
solid flash memory revenue and share growth.
"Although an overall industry recovery has been slow to
materialize, we still expect a modest seasonal increase in demand in
the second half," Barrett continued. "In this environment, our
strategy remains the same: Focus on execution, take prudent cost
cutting measures, and invest to further improve our competitive
position and long-term growth prospects."
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 include the potential impact of
any mergers, acquisitions, divestitures or other business combinations
that may be completed after June 29, 2002.
Continuing uncertainty in global economic conditions makes it
particularly difficult to predict product demand and other related
matters.
-- Revenue in the third quarter is expected to be between $6.3
billion and $6.9 billion.
-- Gross margin percentage in the third quarter is expected to be
51 percent, plus or minus a couple of points. The
second-quarter gross margin percentage was 47 percent and
would have been 48.7 percent without the $106-million charge
related to the online services business. Intel's gross margin
percentage varies primarily with revenue levels, product mix
and pricing, changes in unit costs, capacity utilization, and
timing of factory ramps and associated costs.
-- Gross margin percentage for 2002 is expected to be 51 percent,
plus or minus a few points, lower than the previous
expectation of 53 percent, plus or minus a few points,
primarily due to second-quarter revenue levels and charges.
-- Expenses (R&D, excluding in-process R&D, plus MG&A) in the
third quarter are expected to be approximately $2.1 billion.
In the second half of 2002, the company expects to reduce its
workforce by approximately 4,000 employees exclusive of
acquisitions, primarily through attrition, voluntary
separation programs and some targeted business disinvestments.
Expenses, particularly certain marketing- and
compensation-related expenses, vary depending on the level of
revenue and profits.
-- R&D spending for 2002, excluding in-process R&D, is expected
to be approximately $4.0 billion, lower than the previous
expectation of $4.1 billion.
-- Capital spending for 2002 is expected to be between $5.0
billion and $5.2 billion, lower than the previous expectation
of $5.5 billion, primarily due to non-fab-related spending
reductions, with no change in the company's current and future
microprocessor capacity plans.
-- Gains or losses from equity investments and interest and other
in the third quarter are expected to be a net loss of $25
million due to the expectation of a net loss on equity
investments of approximately $75 million, primarily as a
result of impairment charges. Gains or losses will vary
depending on equity market levels and volatility, gains or
losses realized on the sale or exchange of investments,
determination of impairment charges, including potential
impairment of non-marketable investments, interest rates, cash
balances, mark-to-market of derivative instruments, and
assuming no unanticipated items.
-- The tax rate for 2002 is expected to be approximately 28.4
percent, excluding the impact of acquisition-related costs.
-- Depreciation is expected to be approximately $1.2 billion in
the third quarter and approximately $4.7 billion for the year.
-- Amortization of acquisition-related intangibles and costs is
expected to be approximately $100 million in the third quarter
and approximately $530 million for the full year. |
