<<Intel Misses Wall Street Forecasts,
Announces Plans to Cut 4,000 Jobs
(i will highlight the warnings signs amongst the spins--max).
By DON CLARK
Staff Reporter of THE WALL STREET JOURNAL
Intel Corp., continuing to see little sign of a recovery in technology spending, missed Wall Street estimates for second-quarter profit and said it will reduce its headcount by 4,000, or about 5% of its work force. ( starts great, zero spin. max:)
The biggest maker of semiconductor chips, whose pronouncements are closely watched as a sign of health in the high-tech sector, reported net income of $446 million, or seven cents a share, compared with profit for the year-earlier period of $196 million, or three cents a share. On a nonstandard basis that excludes (in other words the numbers you are about hear are BS, don't look to Intel to get straight, forget it baby!--max) acquisition-related costs, as well as a charge from shutting down its online unit of $106 million, or one cent a share, Intel said earnings per share came to 10 cents, compared with analysts' consensus on that basis of 11 cents, according to Thomson Financial/First Call.( fact is they MISSED even with BS accounting)
Intel also said its gross profit margin was 47%, or 48.7% excluding the online-unit shutdown -- a shade lower than a June 6 prediction of 49% that was widely seen as a bearish sign about the company's prospects. The company had projected a 53% margin for the year before revising its forecast. Revenue was $6.32 billion, slightly lower than the $6.33 billion reported a year ago but in line with an earlier forecast. ( the earlier forecast being a major downgrade from forecast preceding it--max)
Reacting to the sluggish environment, the company said it would slightly( that's a spin word--max) reduce capital expenditures and spending on research and development in addition to cutting jobs.
"We believe the economic recovery is being pushed out, so we are going to go cautious on headcount and cautious on spending," said Andy Bryant, Intel's finance chief. ( "pushed out" is a spin term for we are knee deep in mud and we have no fricking idea when it will ever get better --max)
On a more positive note, the company projected revenue in the current quarter of $6.3 billion to $6.9 billion( they have given themselves enough leeway to drive an Overwide Load of BS through--max) -- flat to slightly above the second-quarter mark. It also projected that its profit margin will recover from less than 49% to about 51% for the balance of the year.
(First Major WS spin ALERT, here comes Da Noise!
Mark Edelstone, an analyst with Morgan Stanley, said he was also encouraged by the fact that inventories of chips don't appear to be stacking up at the company or its distributors. "Intel's balance sheet showed far less stress than I would have expected," he said. (LOL!!!!!)
Intel's stock, which stood at $27 before the company's June 6 forecast, has slid since then with rising pessimism about the personal-computer market. At 4 p.m. Tuesday on the Nasdaq Stock Market, Intel shares fell 76 cents to $18.36 each, and rose in after-hours trading to $18.62.
(and it goes on and on and on--i can't take it no mo'.--max))
The company expanded its work force swiftly during the Internet boom, though it recently has trimmed its headcount by about 7,000 jobs from a peak of about 90,000 a year ago. Intel's proposed job cuts, to be largely carried out through attrition and voluntary incentives, amount to slightly less than 5% of the company's 83,200-employee work force.
Some analysts and former employees this week predicted the company would announce a larger cut, possibly as many as 10,000 jobs, as word spread that Craig Barrett, the company's chief executive, would address Intel employees Tuesday. Despite the moderate move, the fact Intel decided to reduce its number of employees at all was regarded by some company-watchers as a negative sign, in view of the company's past determination to keep investing to prepare for a future upturn.
"If they were that bullish about the future, why do they need to cut the work force?" asked Mark Grossman, an analyst at S.G. Cowen.
Intel said it will reduce its capital spending -- another important barometer for the company's outlook and for manufacturing equipment suppliers -- to a range of $5 billion to $5.2 billion this year, down from its previous expectation of $5.5 billion. But Mr. Bryant said the reductions will affect areas that don't cut back the output of its factories. It also plans to trim research and development spending to $4 billion from $4.1 billion.
The Santa Clara, Calif., company, which supplies about 80% of the microprocessors used in PCs, had looked like it was headed for recovery after the first quarter, when it predicted revenue of $6.4 billion to $7 billion in the second period. On June 6, acknowledging that the company faced weaker demand, Intel reduced its revenue forecast to $6.2 billion to $6.5 billion.
During a conference call, Intel executives said they still expect to see a modest recovery later in the year, albeit beginning later than they originally expected. They said they have no plans to back off their recent campaign of introducing faster microprocessors at a rapid rate, extending its performance lead over No. 2 Advanced Micro Devices Inc.
"We believe we gained two to three points of market share in the quarter, putting us at the highest level in two years," said Paul Otellini, Intel's president and chief operating officer.
Mr. Otellini predicted the company will be able to ship a three-gigahertz version of its Pentium 4 microprocessor line by the Christmas selling season, up from its fastest speed to date of 2.53 gigahertz. In other businesses, Intel said it managed to increase unit shipments of data-storage chips known as flash memory but said competition caused a decrease in shipments of accessory products called chip sets.
Write to Don Clark at don.clark@wsj.com
Updated July 17, 2002>> |
