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To: DJBEINO who wrote (3941)	9/10/1998 4:50:00 PM
From: DJBEINO	Respond to of 9582

Intel Third Quarter Revenue to be Above Expectations Business Wire - September 10, 1998 16:44 SANTA CLARA, Calif.--(BUSINESS WIRE)--Sept. 10, 1998--Stronger than anticipated demand, especially in North America and Europe, is expected to cause revenue to exceed Intel's expectations for the third quarter of 1998, Intel said today. When the company announced second quarter earnings in July, the expectations were that revenue in the third quarter of 1998 would be flat to slightly up from second quarter revenue of $5.9 billion. The company now expects higher revenue. 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. -- The company expects revenue for the third quarter of 1998 to be up approximately 8 to 10 percent from second quarter revenue of $5.9 billion. Consistent with the company's earlier expectations, second half revenue is expected to be greater than the first half revenue. -- Gross margin percentage in the third quarter of 1998 is expected to be up a couple of points from 49 percent in the second quarter. Included in the expectation for gross margin in the third quarter of 1998 are write-offs associated with facilities realignment to improve manufacturing efficiencies, and the previously announced headcount reduction program. Intel's gross margin expectation for the full year 1998 is 52 percent, plus or minus a few points. In the short-term, Intel's gross margin percentage varies primarily with revenue levels and product mix. -- The company 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. -- Expenses (R& D plus MG &A) in the third quarter of 1998 are expected to be approximately 7 to 8 percent higher than second quarter expenses of $1.3 billion, up from earlier guidance of 3 to 5 percent higher than second quarter expenses. Expenses are dependent in part on the level of revenue. -- R & D spending is expected to be approximately $2.8 billion for 1998, including the approximately $165 million for in-process R&D associated with the acquisition of Chips and Technologies, Inc. in the first quarter. -- The company expects interest and other income for the third quarter of 1998 to be approximately $170 million, up from prior guidance of $145 million, assuming no significant changes in interest rates or expected cash balances, and no unanticipated items. -- The tax rate for the remaining quarters of 1998 is expected to be 33.0 percent. -- Capital spending for 1998 is expected to be approximately $4.5 to $4.7 billion, flat to slightly up from $4.5 billion in 1997. The current estimate includes the acquisition of the capital assets of Digital Equipment Corporation's semiconductor manufacturing operations. -- Depreciation is expected to be approximately $2.9 billion for 1998. Depreciation in the third quarter of 1998 is expected to be approximately $760 million.