Sorry to rain on the parade. Stock may not react like what everyone here thinks tomorrow. Here is a recent article. It will be interesting to say the least.
biz.yahoo.com
Tuesday January 13, 9:20 pm Eastern Time
Intel reports slightly higher-than-expected earnings
(previous Santa Clara, adds details, quotes, analysts)
By Therese Poletti
SAN FRANCISCO, Jan. 13 (Reuters) - Intel Corp [Nasdaq:INTC - news]. Tuesday reported slightly higher-than-expected
earnings for the fourth quarter, buoyed by strong performances of powerful new versions of its Pentium chips and strength in
Europe.
Intel reported net income of $1.7 billion, or 98 cents a share, down from $1.9 billion, or $1.06 a share, but above Wall Street
expectations for per-share earnings of 90 cents. Revenue rose to a record $6.5 billion from $6.4 billion.
But the Santa Clara, Calif.-based company also warned that its first quarter revenues would be flat with fourth quarter
revenues of $6.5 billion. The semiconductor giant also unexpectedly forecast that its overall gross profit margins would be
about 55 percent of total revenues in 1998, ''plus or minus a few points.''
Intel said that its expectations for lower profit margins are primarily due to the cost of components it purchases for the
cartridge for the Pentium II processor.
Analysts were clearly disappointed with the forecast and many were planning to cut earnings estimates. They said they viewed
the fourth quarter as coming in line with expectations, because of a few factors. Intel had a lower-than-expected tax rate,
higher interest income and it spent less than it forecast on research and development and sales general and administrative
expenses.
''The results were basically what I was looking for if you net out all the extraneous items,'' said Dan Niles, a BancAmerica
Robertson Stephens analyst. ''The gross margin guidance was definitely a surprise. Saying it was going to 55 percent (of
revenues) next year, that was a shock.''
Intel's chief financial officer Andy Bryant told analysts on a conference call that a lower tax rate added 4 cents a share to its
earnings, which were 98 cents this quarter.
The Santa Clara, Calif.-based company credited its next generation Pentium II chip and a multimedia version of the Pentium
processor called Pentium MMX.
Intel also told analysts on a conference call that its Pentium II processor has had the fastest volume production in its history and
is on target to reach 50 percent of its total production by the end of Intel's second quarter in 1998.
''The Pentium II has ramped faster than any product ever launched,'' said Paul Otellini, executive vice president and director
sales and marketing, on the conference call.
For the year, Intel said its net income rose to a record $6.9 billion, or $3.87 per share, from $5.2 billion, or $2.90 per share,
in 1996. Revenue rose to $25.1 billion, also a record, from $20.8 billion.
The results were released after the close of trading. Intel stock, which rose $1.31 to $76.94 in Nasdaq trading, traded as high
as $77.625 in after-hours activity but analysts said they expect the stock to fall amid an expected slew of estimate cuts on Wall
Street on Wednesday.
''I think people will express disappointment in the manner in which they got to the number,'' said Michael Gumport, a Lehman
Brothers analyst.
Intel said that while Europe was its strongest region this quarter, revenues in the Americas were flat with the third quarter, while
Asia-Pacific and Japan were both down.
Intel executives did not provide a lot of guidance as to how the financial crises in some Asian countries would pan out, but they
said Korea was likely to remain unstable.
Growth in China partially offset weakness in other Asia-Pacific countries such as Korea, Malaysia, Indonesia and Thailand.
Intel also said that Japan is currently soft for PC sales and shows no signs of softening or improving further.
''We have had a really good quarter in India and China,'' Otellini said. ''Asia Pacific is thankfully a very broad region.'' He
said he would expect a ''balancing of micro-climates.'' Near-term, the situation in Korea is not likely to change very much, he
said. |
