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To: Sully- who wrote (6659)	7/17/2001 6:02:46 PM
From: 2MAR$	Respond to of 208838

DJN: =DJ WRAP:Intel 2Q Net Fell 94%; Operating Earnings Top Views SANTA CLARA, Calif. (Dow Jones)--Intel Corp. (INTC) posted a 94% plunge in second-quarter net income, but still beat analysts' expectations. The chip giant also sees continued uncertainty ahead. The company reported net income of $196 million, or 3 cents a diluted share, compared with $3.14 billion, or 45 cents a share, a year earlier. Excluding acquisition-related expenses, Intel said it would have earned $854 million, or 12 cents a share, compared with $3.52 billion, or 50 cents a share, a year earlier. The mean estimate of analysts surveyed by Thomson Financial/First Call was for earnings of 10 cents a share in the latest quarter. The year-earlier results include a $2.1 billion gain on investments, primarily from the sale of assets in the Intel Capital portfolio. The gain in the latest quarter was $3 million. Revenue fell 24% to $6.33 billion, as its gross profit margin was 48%. The company said in April, when it reported first-quarter results, that it expected to report second-quarter revenue between $6.2 billion and $6.8 billion, and a gross margin of 49%, plus or minus a couple of percentage points. Intel, in its first-ever midquarter updated, reiterated those ranges but said the results would likely come in slightly below the ranges' midpoints. The company said in a prepared statement that a lower-than-expected tax rate boosted the quarter's earnings by a penny a share. Intel noted its microprocessor unit posted better-than-expected results, while the communications and flash-memory businesses remained soft. Intel's architecture group - which includes microprocessors, motherboards and other board-level products - posted sales of $5.13 billion, down 24% from a year earlier but roughly flat with first quarter levels. The segment's profit fell 51% to $1.47 billion. Microprocessor unit and chipset unit shipments both exceeded first-quarter levels, while motherboard unit shipments fell sequentially. Also, the company has moved to accelerate its desktop-microprocessor line as part of a transition to the Pentium 4 processor from the Pentium III. Going forward, Intel is forecasting third-quarter revenue of $6.2 billion to $6.8 billion, a gross profit margin of 47% plus or minus "a couple of points" The company said it will provide another midquarter update Sept. 6, and that "continuing uncertainty in global economic conditions make it particularly difficult to predict product demand and other related matters." Intel added that research and development spending, excluding in-process work, should be about $4 billion this year, down from previous expectations of $4.2 billion. The company cited the cut primarily on "reductions in discretionary spending within ongoing programs." Intel also reiterated its 2001 capital-spending target of about $7.5 billion. Both Intel and its rival Advanced Micro Devices Inc. (AMD) have been in an aggressive price war that severely affected AMD's second-quarter results and could put pressure on both compani es' margins. AMD, which beat analysts reduced expectations last week but warned that it could post an operating loss in the third quarter, said it would continue its aggressive pricing to gain more market share. Net income plunged 92% in the second quarter, but the company did ship more than 7.7 million PC processors, setting a new record. (END) DOW JONES NEWS 07-17-01 06:01 PM * end of story *