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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (155607)	1/15/2002 9:04:50 PM
From: puborectalis	Respond to of 186894

Intel Earnings Report Signals Recovery for Chips By Jay Lyman www.NewsFactor.com, Part of the NewsFactor Network January 16, 2002 Intel CEOCraig Barrett said that despite sharp declines in last year's semiconductor market, his company has already positioned itself for recovery. Chip giant Intel (Nasdaq: INTC) on Tuesday reported fourth-quarter 2001 earnings, excluding acquisition-related costs, of US$998 million on $7 billion in revenue. The Santa Clara, California-based company's report and outlook reinforced other indicators that the semiconductor market is on the cusp of recovery but that it will be a slow process, with significant growth pushed out until 2003. "2001 was a terrible year for our industry," said Intel president and CEO Craig Barrett. "Despite this backdrop, we introduced exciting new products, including the industry's first 2.0 GHz processor, gained market segment share, and earned over $1 billion." Up But Not Over IDC senior research analyst Shane Rau told NewsFactor that not much has changed since Intel signaled mid-quarter that demand was better than expected. "I think that Intel is going to say it's at the high end of revenue predictions and that will look good," said Rau before Intel announced earnings after market close. "But I'm very wary of concluding demand is going to rise any further. I don't believe that Q1 (2002) is going to be better than Q4 (2001)." Rau said that while the second half of 2002 may bring revenue increases for chipmakers, the first half is expected to be slow, with overall revenue for the year that could be negative. "It's 2003 when we'll see a healthy rise in revenue," he said. Seasonality Returns Rau said Intel's indications of stronger-than-expected demand may mean a return to seasonality -- with stronger third- and fourth-quarter revenue because of back-to-school and holiday demand. Rau said that would be a welcome change from the turmoil of predicting demand in the chip industry, but added that it may mean slower first and second quarters this year. "The fact that the pattern is returning may provide comfort to people because demand becomes more predictable," Rau said. "As far as outlook for Q1, with seasonality, it should be relatively flat or down compared to Q4." Intel left the issue of demand somewhat up in the air, saying in a statement, "Continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters." Better Chips, Bigger Profits? Rau said new chip manufacturing methods, particularly a move to a .13-micron process that analysts say cuts Intel's fabrication costs in half, is already having an effect on the industry and will allow Intel to control price even more. The chipmaker slashed prices of its microprocessors throughout 2001 in an effort to stimulate demand and keep market share from rivals such as Advanced Micro Devices (NYSE: AMD). "Because of the launch of new products based on new processes, we're seeing the effects now in the form of microprocessors that are smaller, faster, consume less power and generate less heat," Rau said. "In the long run, Intel will have increased flexibility on price," he added. 'Positive Tone' Among the first big technology companies to report its fourth-quarter revenues, Intel set an optimistic tone with its earnings report on the upside of expectations. Rau said the company is a bellwether for the entire semiconductor industry as well as other markets such as PCs and equipment. "I think they're going to want to set a very positive tone and they'll let the numbers speak for themselves for the quarter," Rau said. Intel head Barrett said that despite the sharp declines in last year's semiconductor market, his company has already positioned itself for recovery. "While 2001 was difficult for Intel, I can't imagine changing places with any other company on the planet," Barrett said. "Our 2001 R&D and manufacturing investments position us to grow faster than the industry when the high-tech recovery occurs." Intel's earnings of 15 cents per share beat analyst expectations of about 11 cents per share, and were up 50 percent from 2001's third quarter. However, earnings were off 61 percent from the fourth quarter of 2000.