All: Official press release from Intel..Looks like they got burned from OEM turns...
joey
Wednesday March 4, 4:15 pm Eastern Time
Company Press Release
Intel First Quarter to be Below Expectations
Lower than Anticipated Demand Impacting Results
SANTA CLARA, Calif.--(BUSINESS WIRE)--March 4, 1998--Weaker than anticipated demand, particularly in OEM turns (orders
from PC manufacturers to be shipped within the quarter), is expected to cause revenue and net income levels to fall below Intel's
expectations for the first quarter of 1998, the company said today.
When Intel announced fourth quarter earnings in January, the expectations were that revenue in the first quarter of 1998 would be
approximately flat with fourth quarter revenue of $6.5 billion. The outlook for the first quarter has been revised from the view
presented in the fourth quarter 1997 earnings report on Jan. 13, 1998.
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 reflect the potential impact of any mergers or acquisitions that may be completed after the date
of this release, except as noted below.
- The company expects revenue for the first quarter of 1998 to be
down approximately 10 percent from the fourth quarter revenue of
$6.5 billion.
- Gross margin percentage in the first quarter of 1998 is now
expected to be 53 percent, plus or minus a couple of points. The
change from earlier guidance is due to the lower revenue
expectation. In the short-term, Intel's gross margin percentage
varies primarily with revenue levels and product mix.
Expectations for Intel's gross margin for the full year 1998 will
be updated in the first quarter earnings report.
- The company still believes that over the long-term, the gross
margin percentage will be 50 percent plus or minus a few points.
Intel's long-term gross margin percentage will vary depending on
product mix.
- The company completed the merger of Chips and Technologies Inc.
with Intel Enterprise Corp. during the quarter. The
acquisition is expected to result in a one-time non-deductible
charge in the first quarter of approximately $165 million, or
$0.09 per share. This includes a write-off of in-process R&D.
- Expenses (R&D plus MG&A) in the first quarter of 1998 are
expected to be approximately 3 percent higher than the expenses
of $1.4 billion in the fourth quarter. In January, expectations
were that expenses in the first quarter of 1998 would be
approximately 2 to 5 percent lower than the fourth quarter. The
increase from prior expectations is attributable to the one-time
charge associated with the acquisition of Chips and Technologies
Inc. Expenses are dependent in part on the level of revenue.
- R&D spending is expected to be approximately $3.0 billion for
1998, up from $2.3 billion in 1997. In January, expectations were
that R&D spending in 1998 would be approximately $2.8 billion.
The increase from prior expectations is primarily attributable to
the one-time charge associated with the acquisition of Chips and
Technologies Inc. Expenses are dependent in part on the level of
revenue.
- The company expects interest and other income for the first
quarter of 1998 to be approximately $175 million assuming no
significant changes in cash balances or interest rates, and no
unanticipated items.
- The tax rate in 1998 is expected to be 34.0 percent, excluding
the impact of the one-time charge associated with the acquisition
of Chips and Technologies Inc.
- Capital spending for 1998 is expected to be approximately $5.3
billion, up from $4.5 billion in 1997.
- Depreciation is expected to be approximately $2.7 billion for
1998, up from $2.2 billion in 1997. Depreciation in the first
quarter of 1998 is expected to be approximately $580 million.
The above statements contained in this outlook are forward-looking statements that involve a number of risks and uncertainties. In
addition to factors discussed above, among other factors that could cause actual results to differ materially are the following:
business and economic conditions, and growth in the computing industry in various geographic regions; changes in customer order
patterns, including changes in customer and channel inventory levels; changes in the mixes of microprocessor types and speeds,
purchased components and other products; competitive factors, such as rival chip architectures and manufacturing technologies,
competing software-compatible microprocessors, availability of other computing alternatives and acceptance of new products in
specific market segments; pricing pressures; excess or obsolete inventory and variations in inventory valuation; timing of software
industry product introductions; continued success in technological advances, including development and implementation of new
processes and new strategic products for specific market segments; execution of the manufacturing ramp; excess or shortage of
manufacturing capacity; the ability to successfully integrate and operate any acquired businesses; unanticipated costs or other
adverse effects associated with processors and other products containing errata (deviations from published specifications); risks
associated with foreign operations; litigation involving intellectual property, consumer and other issues; and other risk factors listed
from time to time in the company's SEC reports, including but not limited to the report on Form 10-Q for the quarter ended Sept.
27, 1997 (Part I, Item 2, Outlook section).
Intel's 1998 Step-Up Warrants (INTCW) expire on March 14, 1998. The warrants must be exercised on or before Friday, March 13,
1998. The last day of trading of the warrants on The Nasdaq Stock Market will be March 10, 1998.
Copies of this press release can be obtained via the Internet at www.intc.com or by calling Intel's transfer agent, Harris Trust and
Savings Bank, at 800/298-0146.
Intel, the world's largest chip maker, is also a leading manufacturer of personal computer, networking, and communications
products. Additional information is available at www.intel.com/pressroom.
Note to Editors: Third party marks and brands are property of their respective holders.
Contact:
Intel Corp., Santa Clara
Howard High, 408/765-1488 Press Relations
Doug Lusk, 408/765-1480 Investor Relations |
