Intel's First-Quarter Profit and Revenue Decline (Update3)
2003-04-15 18:17 (New York)
Intel's First-Quarter Profit and Revenue Decline (Update3)
(Adds investor comment in fourth paragraph.)
Santa Clara, California, April 15 (Bloomberg) -- Intel Corp.,
the world's biggest computer-chip maker, said first-quarter sales
fell less than 1 percent. The company said revenue this period
will rise to as much as $7 billion, lifting the stock 5 percent.
Net income in the first quarter dropped 2.2 percent to
$915 million, or 14 cents a share, from $936 million, or 14 cents,
in the same period a year earlier, Chief Financial Officer Andy
Bryant said. Revenue decreased 0.4 percent to $6.75 billion from
$6.78 billion.
Some customers of flash memory used in mobile phones and
digital cameras switched to rivals after Intel raised prices by as
much as 40 percent, Bryant said in an interview. Revenue this
quarter will rise to $6.4 billion to $7 billion, from
$6.32 billion in the year-earlier period, he said.
``They came out and gave what I believe was pretty positive
guidance on the next quarter,'' said Robert Siewert, an analyst
with Victory Capital Management, which manages $50 billion and
owns Intel shares. ``That alone is pretty positive for Intel and
the entire technology industry.''
Intel shares rose 90 cents to $18.03 in extended trading
following the announcement. They fell 3 cents to $17.13 at 4 p.m.
New York time in Nasdaq Stock Market trading. The stock dropped
50 percent in 2002 and rose 4.6 percent in the first quarter.
``People were not prepared for so robust revenue growth,''
said Ned Riley, chief investment strategist at State Street Global
Advisors, which manages $763 billion and holds Intel shares. ``The
strong are surviving and doing very well.''
Gross Profit
Excluding some costs, Santa Clara, California-based Intel was
expected to earn 12 cents a share on sales of $6.7 billion in the
first quarter, the average Thomson Financial analyst estimates.
Intel is expected to earn 12 cents on sales of $6.6 billion this
quarter, according to Thomson Financial.
First-quarter gross profit rose, helped by sales of higher-
priced PC processors, less-than-expected equipment costs and
reduced shipments of chips for Microsoft Corp.'s Xbox video-game
machine. Profit also was helped by sales of products in inventory
that had been written off.
``The magnitude of that sale I would be interested in
hearing about,'' said Victory Capital's Siewert, referring to the
previously reserved chips.
Gross margin, or the percentage of sales left after
manufacturing costs, was 52 percent, at the high end of Intel's
forecast. The margin this quarter will be 50 percent, plus or
minus a couple of percentage points, Bryant said.
Chip Slump
Industrywide chip sales rose 1.3 percent to $140.7 billion in
2002 after declining 33 percent in 2001 in the steepest drop.
Consumers and businesses started curbing purchases of personal
computers and other electronics in the second half of 2002. Bryant
said processor sales have been at the high end of Intel forecasts
for two quarters.
``It's a little bit encouraging to see small upside surprises
instead of small downside surprises in the last few,'' Bryant
said. He said he is unable to tell if the results indicate a
rebound.
Intel, whose quarterly sales rose every period from 1990 to
1997, commands more than 85 percent of the market for personal
computer processors. Chief Executive Officer Craig Barrett is
trying to boost sales of chips for server computers and mobile
phones to counter slowing demand for PCs.
(Intel began a conference call at 2:30 p.m. California time
to discuss the results. Dial (1) (719) 457-2637.)
--Dan Goodin in San Francisco, (1)(415) 743-3548 or
dgoodin@bloomberg.net. Editor: Wayne
Story illustration: To compare the performance of Intel shares to
benchmark indexes, see {INTC US <Equity> COMP D <GO>}. For a
series of Bloomberg functions related to Intel, see
{CNP 05557430102 <GO>}.
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