| | OLDTRADER...Intel's earnings preview....
***Hope it bodes well for Dell***
Intel's PC, Wireless Success May Have Sparked Record Results
BY JAMES DETAR
INVESTOR'S BUSINESS DAILY
Intel Corp. (INTC) marches into 2004 with hefty changes under way — and expectations of revealing hefty fourth-quarter results on Wednesday.
The longtime king of PC chips has set its sights this year on the consumer electronics market, company President Paul Otellini told a Consumer Electronics Show audience last week.
"For Intel in 2004, this effort will receive as much focus as the work we did last year to advance wireless technologies for mobile computing," Otellini said.
That's the near future. For the near past, some tried-and-true markets such as servers and notebooks likely sparked Intel to solid results to end 2003, analysts say.
"Chances are they blew away the numbers," said American Technology Research Inc. analyst Rick Whittington in Old Greenwich, Conn. "They underestimated how strong the server and notebook markets would be."
The chipmaker plans to release fourth-quarter and full-year 2003 results after the market closes Wednesday. Last month, Intel said it expected quarterly revenue of $8.5 billion to $8.7 billion. The consensus of 34 analysts polled by Thomson Financial/First Call is $8.6 billion.
Many analysts expect the company to hit the upper end of its earlier guidance.
Indeed, at an Intel event Tuesday in San Francisco, Senior Vice President Mike Fister said signs finally point to improved sales of network servers.
Intel could surpass its record quarterly revenue of $8.7 billion, which it reached in third-quarter 2000, at the peak of the boom.
At the analyst consensus number, Intel would have 2003 sales of $30 billion, its second-best year after $33.7 billion in 2000.
Yet analysts say it could be awhile before Intel makes huge strides in the feisty consumer electronics market. Rivals there include cell phone chip leader Texas Instruments Inc. (TXN) and broadband Internet gear chipmaker Broadcom Corp. (BRCM)
"It remains to be seen if Intel can execute on that" consumer strategy, said Mark Edelstone, a Morgan Stanley & Co. analyst in San Francisco.
But it's not forgetting its bread-and-butter PC market. Among its new products for this year is the PCI Express "bus."
A bus is a group of circuits and software that let data flow from one part of a computer to another, or from one PC to another. This new bus promises to speed operations within PCs.
In retrospect, Intel gets pretty good marks for its 2003 wireless strategy. In March, Intel rolled out its Centrino wireless chips for notebook PCs. Intel Vice President Anand Chandrasekher says Centrino sales are ahead of early expectations.
Centrino, a chipset, includes a microprocessor and a wireless chip. Since the rollout, wireless hot spots have popped up everywhere, making it easier for notebook owners to hook into the Net in many locales.
The Santa Clara, Calif.-based company also was helped in 2003 by rising PC sales. Intel microprocessors power four in five PCs.
International Data Corp. says PC unit shipments rose 11.4% in 2003, to 152 million. It expects shipments to rise another 11.4% this year, to some 170 million. That's vs. just 1.7% growth in 2002 and a 3.9% decline in 2001.
In another major move last month, Intel put all of its communications chip products into one unit. Flash, cell phone and communications gear chips go under one umbrella.
It did so after a series of missteps. First, it increased prices for flash chips in early 2003. Customers balked and Intel lost market share.
In addition, Intel hasn't had as much success as it would like in the cell phone market. It has signed a couple of customers, though, including No. 2 handset maker Motorola Inc. (MOT)
On Dec. 10, Intel promoted Sean Maloney to head the expanded Intel Communications group.
Flash and cell phones had been in a separate wireless group, which goes away.
Morgan Stanley's Edelstone says the main goal was to cut costs, but Piper Jaffray & Co. analyst Ashok Kumar in San Francisco likes that move.
"Maloney is highly regarded in the company for what he has done elsewhere. And they hope to have an encore in that product segment," Kumar said.
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