>FOCUS - Intel more than doubled fourth-quarter profits
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By Barbara Grady
SAN FRANCISCO, Jan 14 (Reuter) - Intel Corp , powered by surging demand for its Pentium and Pentium Pro microprocessors, said Tuesday fourth quarter profits more than doubled to $1.9 billion, exceeding even Wall Street's most optimistic estimates.
Industry analysts said the profit, which equaled $2.13 a share, was significantly above the consensus forecast of $1.84 a share, proving once again that the Santa Clara, Calif.-based giant was operating at nearly peak efficiency.
"Everything worked for them in the fourth quarter: unit demand went through the roof, manufacturing went smoothly, so they were able to crank out a lot of processors," said Dan Niles, an analyst at Robertson, Stephens & Co.
Intel's fourth quarter profit compared with net income of $867 million or 98 cents a share in the same period last year. Revenues rose to $6.4 billion from $4.58 billion.
The report marked the seventh year in a row of record revenues and earnings for Intel, the world's largest maker of semiconductors.
"Intel hit on all cylinders in 1996, the 25th anniversary of the introduction of the microprocessor," Intel Chief Executive Andrew Grove said in a statement.
Most industry analysts expected Intel to report strong quarterly results due to surging demand for its Pentium and Pentium Pro microprocessors. However, few expected it to be so high. According to First Call, which tracks estimates from 35 brokers, the most optimistic forecast for the quarter was $2.05 a share.
"They blew away everybody's numbers," Niles said. "This was a phenomenal quarter," in which Intel did better "on every line item" than Wall Street expected.
"This was largely a Pentium-driven rally," analyst John Lazlo of PaineWebber said, adding that the quarter was "a blowout."
Intel, which provides the microprocessors used in 90 percent of the world's computers, is widely regarded as a bellwether for the personal computer industry so a strong report from Intel usually provides a lift to PC makers' stock.
Lazlo said because of the latest earnings report, "people will continue to pound the table on the stock," which has almost tripled in price over the last year.
Intel attributed the performance to continued growth of the Internet, the rapid penetration of personal computers into emerging markets like Asia and the current wave of computer upgrades sweeping through corporations for the stellar performance.
In a sign of continued growth, Intel announced plans for a two-for-one stock split and said it expected first quarter 1997 revenues to remain steady with the fourth quarter's level of $6.4 billion, an improvement over the first quarter of 1996 when Intel reported revenues of $4.6 billion.
Intel also said its gross profit margin, the difference between revenues and the cost of goods sold, is expected to be flat to lower than the fourth quarter's margin of 63 percent.
For all of 1996, Intel earned $5.2 billion, or $5.81 per share, compared with earnings of $3.6 billion, or $4.03 a share, in 1995. Revenues rose to $20.8 billion, up 29 percent from 1995's $16.2 billion.
Intel, which issued its earnings report after markets closed, was the most actively traded stock on Nasdaq Tuesday, with more than 14 million shares changing hands. The stock ended up 25 cents at $147.125, a 52-week high. <
Nothing but good comments from analysts, etc. I don't know what to make of the selloff at the finish.
Paul |
