Intel Tops Analysts' Forecasts,
But Warns Revenue Will Be Flat
An INTERACTIVE JOURNAL News Roundup
Chip giant Intel Corp. reported results for its latest period late Tuesday that topped analysts' expectations as revenue climbed 18%. But the chip maker warned second-quarter revenue will be flat to slightly down from the first quarter.
For the first quarter, the Santa Clara, Calif., company reported net income of $2 billion, or 57 cents a share, a 57% gain from $1.3 billion, or 36 cents a share, in the year-ago quarter. That topped the consensus call of analysts surveyed by First Call for net income of 55 cents a share.
Revenue, meanwhile, climbed to $7.1 billion from $6 billion in the year-ago quarter. But that figure trailed some analysts' estimates.
Company Profile: Intel
For the fourth quarter, Intel earned 60 cents a share on revenue of $7.6 billion in revenue. The fourth quarter is generally the strongest for makers of chips and PCs, while the first quarter is generally the weakest. Intel cited those seasonal factors in warning that it expects second-quarter revenue to be flat to slightly down from the first quarter.
All results are adjusted for a 2-for-1 stock split that was paid April 11 to shareholders of record on March 23.
Intel said gross margins came in at 59%, slightly ahead of analysts' projections and the 58.3% gross margins recorded in the fourth quarter. The company said it expects gross margins for 1999 to be approximately 57%.
The company said expenses for the second quarter are expected to be 6% to 10% higher than the first quarter's $1.6 billion, citing higher merchandising spending and increased research and development. R&D spending for the year, it said, is expected to be approximately $3 billion.
"We are pleased with our substantial year-over-year growth in profitability resulting from our cost-control efforts," Intel President and Chief Executive Craig Barrett said in a statement. Mr. Barrett added that the company is seeing "positive results" from new products such as the Pentium III and Xeon processors, higher-speed Celeron chips and mobile Pentium II processors.
Shares of Intel fell 75 cents to $60.50 on the Nasdaq Stock Market Tuesday. The results were released after the close of trading.
Before the earnings were released, analysts had little fear that Compaq Computer Corp.'s recent earnings warning would be reflected in Intel's numbers. Compaq, the PC giant that accounted for 13% of Intel's revenue last year, warned late Friday that its first-quarter results will fall far short of expectations, rattling both the computer and semiconductor industries.
ABN Amro analyst David Wu said Intel's other major customers must be faring well, since the chip maker would have warned of a disappointing outlook if its business were in trouble.
"The other 87% of [Intel's] business is doing well," he said.
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