McMannis - Re: "where is all the good information about Intel?"
How's this, Jimmy?
intel.com
Record Intel Third Quarter Revenue
Q3 Revenue $6.7 Billion; Q3 Earnings per Share $0.89; Quarterly
Cash Dividend Increased
SANTA CLARA, Calif., Oct.13, 1998 - Driven by strong worldwide demand for PC products, Intel Corporation set a new record for quarterly revenue and unit shipments of microprocessors, the company said today.
Third quarter revenue of $6.7 billion was the highest ever and was up 9 percent from third quarter 1997 revenue of $6.2 billion. Third quarter revenue was up 14 percent from second quarter 1998 revenue of $5.9 billion.
Net income in the third quarter was $1.6 billion, essentially flat with the third quarter of 1997. Net income in the third quarter was up 33 percent from second quarter 1998 net income of $1.2 billion.
Earnings per share in the third quarter increased to $0.89 from $0.88 in the third quarter of 1997 and rose 35 percent from $0.66 in the second quarter of 1998.
"We are pleased with our overall performance in the last quarter," said Dr. Craig R. Barrett, president and chief executive officer. "We had growth across nearly all of our geographies and product lines, including strong microprocessor sales. In the third quarter, the PC industry recovered from its inventory problems and is benefiting from strong seasonal demand."
"In the product development area, we had successful introductions of new products for each computing segment, ranging from new Pentium® II Xeon™ processors for servers and workstations to the Intel® Celeron™ processors 333 MHz and 300A MHz for basic computers."
During the quarter, the company paid its regular quarterly cash dividend of $0.03 per share. The dividend was paid on Sept. 1, 1998, to stockholders of record on Aug. 7, 1998. Also during the quarter, the board of directors declared a $0.04 per share quarterly dividend to be paid on Dec. 1, 1998, to stockholders of record on Nov. 7, 1998. Intel has paid a regular quarterly cash dividend for six years, and the dividend has been increased in each of the past five years.
In the third quarter, the company repurchased a total of 20.1 million shares of common stock at a cost of $1.7 billion. The company has repurchased a total of 64.4 million shares at a cost of $5.2 billion year to date, and has repurchased 277.8 million shares at a total cost of $12.1 billion since the program began in 1990.
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 fourth quarter of 1998 to be up
slightly from third quarter revenue of $6.7 billion. Consistent with the
company's earlier expectations, second half revenue is expected to be
greater than first half revenue.
** Gross margin percentage in the fourth quarter of 1998 is expected to be
flat to slightly up from 53 percent in the third quarter. In the short-term,
Intel's gross margin percentage varies primarily with revenue levels and
product mix.
** Expenses (R&D plus MG&A) in the fourth quarter of 1998 are expected
to be approximately 3 to 5 percent higher than third quarter expenses of
$1.4 billion. Expenses are dependent in part on the level of revenue.
** The company has reduced headcount by approximately 2,000 people
since the end of the first quarter, excluding approximately 1,800 people
added as a result of the acquisition of Digital Equipment Corporation's
semiconductor manufacturing operations. Intel is on track to complete the
reduction of approximately 3,000 employees by the end of the year.
** R&D spending for the fourth quarter of 1998 is expected to be
approximately $650 million.
** The company expects interest and other income for the fourth quarter of
1998 to be approximately $160 million, assuming no significant changes in
expected interest rates or cash balances, and no unanticipated items.
** The tax rate for the fourth quarter of 1998 is expected to be 33.0
percent.
** Capital spending for 1998 is now expected to be approximately $4.2
billion. This is less than the previous guidance for the year of $4.5 to $4.7
billion. This change in guidance is primarily as a result of the facilities
realignment that the company mentioned in the third quarter pre-release in
September and the company's continued efforts to control costs. The
current estimate includes the acquisition of the capital assets of Digital
Equipment Corporation's semiconductor manufacturing operations.
** Depreciation for the fourth quarter of 1998 is expected to be
approximately $780 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 such as the current global financial difficulties, 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 and acceptance of new products in
specific market segments; pricing pressures; excess or obsolete inventory
and variations in inventory valuation; continued success in technological
advances, including development and implementation of new processes
and strategic products for specific market segments; execution of the
manufacturing ramp; costs associated with excess or shortage of
manufacturing capacity; unanticipated costs or other adverse effects
associated with processors and other products containing errata
(deviations from published specifications); impact on the Company's
business due to internal systems or systems of suppliers and other third
parties adversely affected by year 2000 problems; litigation involving
antitrust, 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 June 27,
1998 (Part I, Item 2, Outlook section).
THIRD QUARTER 1998 BUSINESS REVIEW
** Unit shipments of microprocessors set a new record in the third quarter.
** Chipset unit shipments were up significantly from the second quarter
and set a new record.
** Motherboard units shipped in the third quarter were up from the second
quarter.
** Embedded processor and microcontroller unit shipments were down
from the second quarter.
** Flash memory units shipped during the third quarter were up from the
second quarter.
** Unit shipments of Fast Ethernet connections, hubs and switches were
all up from the second quarter.
** Gross margin percentage was 53 percent, up from 49 percent in the
second quarter. Gross margin improved due to a favorable mix of the P6
family of processors and higher revenue in the third quarter, as well as the
realization of benefits from continuing product cost reduction efforts.
** Expenses during the quarter were up 7 percent from the second
quarter, consistent with the revised guidance Intel gave in September that
spending was expected to be 7 to 8 percent higher than the second
quarter expenses.
** The effective tax rate for the third quarter was 33.0 percent.
THIRD QUARTER 1998 HIGHLIGHTS
Processor and Platform Products
** On Aug. 24, Intel introduced the Pentium II processor 450 MHz, the
fastest processor ever for performance desktop PCs and entry-level servers
and workstations.
** During the quarter, Intel announced new 333 MHz and 300 MHz
versions of the Intel Celeron processor, both with 128 KB of integrated L2
cache on the processor core, designed to meet the specific needs of
Basic PC users.
** Building on the broad and rapid adoption of Pentium II processor-based
mobile PCs, Intel introduced the mobile Pentium II processor 300 MHz.
This processor offers mobile users a performance boost while preserving
system battery life.
** During the quarter, Intel launched the Pentium II Xeon processor,
specifically designed for mid- and high-range servers and workstations.
This processor features high performance, scalability, manageability and
mission-critical reliability.
Networking and Communications Products
** Intel announced the industry's first single chip phoneline based silicon
solution for home networking during the quarter. The Intel 21145
Phoneline/Ethernet LAN controller will enable home networking over
existing telephone lines. This technology can help family members
simultaneously access computer files and the Internet, as well as print
documents and play computer games, from any PC in the home.
** On Aug. 31, the ProShare® Video System 500 was introduced. This
new desktop video conferencing product is distinguished by its
single-board design, improved ease of use, and higher quality video.
** During the quarter, Intel announced LANDesk® Client Manager 3.3 cv,
a new version of systems management software that provides a migration
path for customers who want to increase the management level of older
PCs as they move toward full deployment of Wired for Management
(WfM)-enabled systems.
Computer Enhancement Products
** On Sept. 29, Eastman Kodak Corporation and Intel detailed their new
digital imaging strategy to bridge traditional picture-taking with the benefits
of digital imaging. This is to be accomplished through film digitization,
jointly developed products and a three-year, collaborative marketing
campaign in which the companies will spend up to $150 million. The two
companies have also begun market tests for Kodak Picture CD*, an
all-in-one, auto-loading CD-ROM that gives consumers their pictures in an
easy-to-use, easy-to-store digital format.
Corporate Strategic Investments
** During the quarter, Intel closed approximately 25 new equity
investments totaling approximately $65 million. Intel's corporate strategic
investment program currently includes approximately 200 equity
investment positions. Some of the areas the company invested in during
the third quarter included enterprise software, wireless networks, and
advanced semiconductor process technologies. These investments were
made with the intent of expanding the computing industry and enhancing
Intel's business capabilities.
Manufacturing Review
** As planned, Intel is approaching the completion of the 0.25 micron
conversion and expects to exit 1998 with all microprocessor shipments
manufactured on the 0.25 micron process technology. Intel's
implementation of the 0.18 micron process technology is scheduled to
begin in the first half of 1999.
** Intel continues to make progress in lowering manufacturing costs.
During the quarter, the company announced additional headcount
reduction plans for 1999. This includes approximately 675 manufacturing
positions at Fab 17 in Hudson, Mass., and 500 to 700 manufacturing
positions in Puerto Rico.
FINANCIAL INFORMATION
The financial review section is in the tables following this release. Along
with the income statement and balance sheet information, this additional
information is also available from the investor Website at www.intc.com in
a spreadsheet format that can be downloaded.
Copies of this earnings release and Intel's 1997 annual report can be
obtained via the Internet at www.intc.com or by calling Intel's transfer
agent, Harris Trust and Savings Bank, at (800) 298-0146.
Intel, the world's largest chip maker, is also a leading manufacturer of
computer, networking and communications products. Additional
information about Intel is available at www.intel.com/pressroom.
INTEL CORPORATION
CONSOLIDATED SUMMARY FINANCIAL STATEMENTS
(In millions, except per share amounts)
INCOME
Three Months
Ended
Nine Months
Ended
Sept. 26,
1998
Sept. 27,
1997
Sept. 26,
1998
Sept. 27,
1997
NET REVENUE
$ 6,731
$ 6,155
$ 18,659
$ 18,563
Cost of sales
3,192
2,604
8,968
7,254
Research and
development
617
586
1,835
1,742
Marketing, general and
administrative
766
676
2,148
2,073
Purchased in-process
research and
development
-
-
165
-
Operating costs and
expenses
4,575
3,866
13,116
11,069
OPERATING INCOME
2,156
2,289
5,543
7,494
Interest and other
170
151
514
571
INCOME BEFORE
TAXES
2,326
2,440
6,057
8,065
Income taxes
767
866
2,053
2,863
NET INCOME
$ 1,559
$ 1,574
$ 4,004
$ 5,202
BASIC EARNINGS
PER SHARE
$ 0.93
$ 0.96
$ 2.40
$ 3.18
DILUTED EARNINGS
PER SHARE
$ 0.89
$ 0.88
$ 2.27
$ 2.89
COMMON SHARES
OUTSTANDING
1,678
1,635
1,670
1,636
COMMON SHARES
ASSUMING DILUTION
1,753
1,79 |
