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To: Paul Kern who wrote (5325)	1/16/2001 6:29:41 PM
From: zx	Respond to of 19633

Tuesday January 16 5:53 PM ET Intel Just Beats Estimates Reuters Photo By Duncan Martell SAN FRANCISCO (Reuters) - Intel Corp.'s fourth-quarter results squeaked by already lowered expectations as the world's largest chipmaker suffered from flagging personal computer sales and forecast its first quarter-sales would fall about 15 percent from the fourth quarter level. Intel (NasdaqNM:INTC - news), which warned on Dec. 7 that fourth-quarter sales would not meet expectations, reported earnings excluding acquisition-related costs of $2.63 billion, or 38 cents a share, vs. $2.39 billion, or 34 cents a share. On that basis, the results beat the consensus analyst forecast of 37 cents a share, as compiled by First Call/Thomson Financial. The company said its fourth quarter sales rose 6 percent to $8.70 billion from $8.21 billion a year ago. Intel joins a host of other companies -- high- and low-tech alike -- that have warned the slowing economy is already crimping sales and profits. Gateway Inc. (NYSE:GTW - news) and Hewlett-Packard Co. (NYSE:HWP - news) have already announced earnings trouble, suggesting that the personal computer industry is in for an especially tough year in 2001. ``Intel is entering the first quarter with the worst visibility and momentum in recent memory,'' said U.S. Bancorp Piper Jaffray analyst Ashok Kumar. ``If PC growth rates don't improve by the third quarter, you'll end up with a negative growth rate for the whole year, which would be a first in the history of the PC industry.'' 'Difficult To Call' Intel said its best estimate was that revenue for the first quarter of 2001 would be down 15 percent, plus or minus several points, from the fourth quarter, due to seasonal factors and the impact of slowing worldwide economies. Historically, Intel's revenues have fallen about 5 percent in first quarter from the fourth quarter. ``It's just really difficult to call whether it's a slowdown or a recession,'' Intel Chief Financial Officer Andy Bryant told Reuters in an interview. ``There's just an economic blanket over the world right now and we'll see what happens when things pick up again.'' The company said that it expected its gross margin percentage in the first quarter of 2001 to be about 58 percent, plus or minus a couple of points, down from 63 percent in the fourth quarter, mostly due to lower revenue. The Santa Clara, Calif.-based technology bellwether also said it expected to spend about $4.3 billion in 2001 on research and development, up from $3.9 billion in 2000. It said it expected to spend about $7.5 billion on capital expenditures, up from the $6.7 billion it spent in 2000. ``Their capital spending plans amount to a wait-and-see attitude, but they're seeing it as a glass half-full and indicating some long-term optimism based on what they can see at this point,'' said Needham & Co. analyst Dan Scovel. Bryant said Intel's large cash reserves and strong financial position allowed it to continue to invest even when the economy slows. ``These are advantages of being Intel ... and when the economy does start growing again, we can meet our customers' demands,'' he said. He added that the company plans to ramp up aggressively the production of its latest microprocessor, the Pentium 4, in the first quarter. Boosted Capital Spending Is Warranted The increased capital spending is warranted, Intel said, in order to position itself better for the transition to making chips with smaller and smaller line widths and using larger silicon wafers, from which semiconductors are made. These transitions boost productivity and cut costs because more chips can be gotten out of each wafer. Intel also said the average selling price of its microprocessors -- closely watched by analysts and investors -- was little changed from the third quarter. Some analysts have for months been predicting a fierce price war between Intel and its rival Advanced Micro Devices Inc. (NYSE:AMD - news) ``The environment is ripe for very malignant pricing,'' said Kumar. ``Both these vendors have capacity that's about 50 percent more than demand'' and that doesn't necessarily bode well for keeping average selling prices steady. Including acquisition-related costs, Intel said its net income for the fourth quarter rose 4 percent to $2.19 billion from $2.11 billion a year earlier. Net earnings per share rose 7 percent to 32 cents on a diluted basis from 30 cents a year earlier. Intel is among the first of the big high-tech companies to report quarterly earnings and, as such, is being closely watched to help gauge where high-tech spending is headed in light of the slowing economy. Intel shares slipped 3/4 to $31-3/8 in regular trading on the Nasdaq, before the results were released. In after-hours activity, Intel stock rose to $31-5/8 on Instinet. The shares have tumbled more than 50 percent since hitting a record of $75.81 Aug. 28, 2000., underperforming the Standard & Poor's 500. The stock's year low is $29-13/16. Intel (INTC) 31 3/8 -3/4: -- Update -- Commenting on Q1 sequential sales decline, INTC expects it to be relatively common across all geographies... Going back to Q4, INTC said that while it hasn't seen the numbers from its competitors yet, it believes those numbers will show that INTC held or gained market share in Q4... INTC +1 3/64