more from cnnfn:
Intel First Quarter To Be Below Expectations
Lower than Anticipated Demand Impacting Results
SANTA CLARA, Calif., March 4, 1998 - Weaker than anticipated demand,
particularly in OEM turns (orders from PC manufacturers to be shipped
within the quarter), is expected to cause revenue and net income levels to
fall below Intel's expectations for the first quarter of 1998, the company
said today. When Intel announced fourth quarter earnings in January, the
expectations were that revenue in the first quarter of 1998 would be
approximately flat with fourth quarter revenue of $6.5 billion. The outlook for
the first quarter has been revised from the view presented in the fourth
quarter 1997 earnings report on January 13, 1998.
BUSINESS OUTLOOK
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
These statements do not reflect the potential impact of any mergers or
acquisitions that may be completed after the date of this release, except
as noted below.
The company expects revenue for the first quarter of 1998 to be
down approximately 10 percent from the fourth quarter revenue of
$6.5 billion.
Gross margin percentage in the first quarter of 1998 is now
expected to be 53 percent, plus or minus a couple of points. The
change from earlier guidance is due to the lower revenue
expectation. In the short-term, Intel's gross margin percentage
varies primarily with revenue levels and product mix. Expectations
for Intel's gross margin for the full year 1998 will be updated in the
first quarter earnings report.
The company still believes that over the long-term, the gross margin
percentage will be 50 percent plus or minus a few points. Intel's
long-term gross margin percentage will vary depending on product
mix.
The company completed the merger of Chips and Technologies,
Inc. with Intel Enterprise Corporation during the quarter. The
acquisition is expected to result in a one-time non-deductible
charge in the first quarter of approximately $165 million, or $0.09
per share. This includes a write-off of in-process R&D.
Expenses (R& D plus MG &A) in the first quarter of 1998 are
expected to be approximately 3 percent higher than the expenses
of $1.4 billion in the fourth quarter. In January, expectations were
that expenses in the first quarter of 1998 would be approximately 2
to 5 percent lower than the fourth quarter. The increase from prior
expectations is attributable to the one time charge associated with
the acquisition of Chips and Technologies, Inc. Expenses are
dependent in part on the level of revenue.
R & D spending is expected to be approximately $3.0 billion for
1998, up from $2.3 billion in 1997. In January, expectations were
that R&D spending in 1998 would be approximately $2.8 billion. The
increase from prior expectations is primarily attributable to the one
time charge associated with the acquisition of Chips and
Technologies, Inc. Expenses are dependent in part on the level of
revenue.
The company expects interest and other income for the first quarter
of 1998 to be approximately $175 million assuming no significant
changes in cash balances or interest rates, and no unanticipated
items.
The tax rate in 1998 is expected to be 34.0 percent, excluding the
impact of the one time charge associated with the acquisition of
Chips and Technologies, Inc.
Capital spending for 1998 is expected to be approximately $5.3
billion, up from $4.5 billion in 1997.
Depreciation is expected to be approximately $2.7 billion for 1998,
up from $2.2 billion in 1997. Depreciation in the first quarter of 1998
is expected to be approximately $580 million.
The above statements contained in this outlook are forward-looking
statements that involve a number of risks and uncertainties. In addition to
factors discussed above, among other factors that could cause actual
results to differ materially are the following: business and economic
conditions, and growth in the computing industry in various geographic
regions; changes in customer order patterns, including changes in
customer and channel inventory levels; changes in the mixes of
microprocessor types and speeds, purchased components and other
products; competitive factors, such as rival chip architectures and
manufacturing technologies, competing software-compatible
microprocessors, availability of other computing alternatives and
acceptance of new products in specific market segments; pricing
pressures; excess or obsolete inventory and variations in inventory
valuation; timing of software industry product introductions; continued
success in technological advances, including development and
implementation of new processes and new strategic products for specific
market segments; execution of the manufacturing ramp; excess or
shortage of manufacturing capacity; the ability to successfully integrate
and operate any acquired businesses; unanticipated costs or other
adverse effects associated with processors and other products containing
errata (deviations from published specifications); risks associated with
foreign operations; litigation involving intellectual property, consumer and
other issues; and other risk factors listed from time to time in the
company's SEC reports, including but not limited to the report on Form
10-Q for the quarter ended September 27, 1997 (Part I, Item 2, Outlook
section).
Intel's 1998 Step-Up Warrants (INTCW) expire on March 14, 1998. The
warrants must be exercised on or before Friday, March 13, 1998. The last
day of trading of the warrants on The Nasdaq Stock Market will be March
10, 1998.
Copies of this press release can be obtained via the Internet at
www.intc.com or by calling Intel's transfer agent, Harris Trust and Savings
Bank, at 1-800-298-0146.
Intel, the world's largest chip maker, is also a leading manufacturer of
personal computer, networking and communications products. Additional
information is available at www.intel.com/pressroom. |
