Intel Third Quarter Revenue to be Above Expectations
Business Wire - September 10, 1998 16:44
SANTA CLARA, Calif.--(BUSINESS WIRE)--Sept. 10, 1998--Stronger than anticipated demand, especially in North
America and Europe, is expected to cause revenue to exceed Intel's expectations for the third quarter of 1998, Intel said today.
When the company announced second quarter earnings in July, the expectations were that revenue in the third quarter of 1998
would be flat to slightly up from second quarter revenue of $5.9 billion. The company now expects higher revenue.
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.
-- The company expects revenue for the third quarter of 1998 to
be up approximately 8 to 10 percent from second quarter
revenue of $5.9 billion. Consistent with the company's
earlier expectations, second half revenue is expected to be
greater than the first half revenue.
-- Gross margin percentage in the third quarter of 1998 is
expected to be up a couple of points from 49 percent in the
second quarter. Included in the expectation for gross margin
in the third quarter of 1998 are write-offs associated with
facilities realignment to improve manufacturing
efficiencies, and the previously announced headcount
reduction program. Intel's gross margin expectation for the
full year 1998 is 52 percent, plus or minus a few points. In
the short-term, Intel's gross margin percentage varies
primarily with revenue levels and product mix.
-- The company 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.
-- Expenses (R& D plus MG &A) in the third quarter of 1998 are
expected to be approximately 7 to 8 percent higher than
second quarter expenses of $1.3 billion, up from earlier
guidance of 3 to 5 percent higher than second quarter
expenses. Expenses are dependent in part on the level of
revenue.
-- R & D spending is expected to be approximately $2.8 billion
for 1998, including the approximately $165 million for
in-process R&D associated with the acquisition of Chips and
Technologies, Inc. in the first quarter.
-- The company expects interest and other income for the third
quarter of 1998 to be approximately $170 million, up from
prior guidance of $145 million, assuming no significant
changes in interest rates or expected cash balances, and no
unanticipated items.
-- The tax rate for the remaining quarters of 1998 is expected
to be 33.0 percent.
-- Capital spending for 1998 is expected to be approximately
$4.5 to $4.7 billion, flat to slightly up from $4.5 billion
in 1997. The current estimate includes the acquisition of
the capital assets of Digital Equipment Corporation's
semiconductor manufacturing operations.
-- Depreciation is expected to be approximately $2.9 billion
for 1998. Depreciation in the third quarter of 1998 is
expected to be approximately $760 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 and acceptance of new products in specific market segments;
pricing pressures; excess or obsolete inventory and variations in inventory valuation; development and timing of introduction of
compelling software applications; continued success in technological advances, including development and implementation of
new processes and strategic products for specific market segments; execution of the manufacturing ramp; costs associated with
excess manufacturing capacity; the ability to grow new businesses and 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); impact on the Company's business due to internal systems or systems of suppliers
and other third parties adversely affected by year 2000 problems; claims due to year 2000 issues allegedly related to the
Company's products or year 2000 remediation efforts; and litigation involving antitrust, 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 June 27, 1998 (Part I, Item 2, Outlook section).
Copies of this earnings release and Intel's 1997 annual report can be obtained via the Internet at www.intc.com or by calling
Intel's transfer agent, Harris Trust and Savings Bank, at 1-800-298-0146.
Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products.
Additional information about Intel is available at www.intel.com/pressroom.
|
