Nihil &Intel Investors - More Coverage of Intel's Alex Lenke's speech on Q498 prospects and 1999 Products and Plans.
Sounds like we have a NEW Investor Relations Manager - I sure hope he knows how to use the Internet.
Perhaps we can all chip in a few dollars and buy him a membership to Silicon Investor ?
Note the following two comments:
"China will be bigger than Japan in 1999 barring any major changes at the last minute," he said.
" And Intel continues to develop new technology even before the latest product hits the market, Lenke said. Like other chip makers, Intel is already working on .13-micron, .10-micron and even .07-micron chips. "
Japan may be of secondary importance due to growth in China !
Paul
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12/03 9:52P (DJ) Intel Expects 4th-Quarter Revenue To Grow 8% To 10% From 3rd-Quarter
Story 1460 (INTC-D, INTC, I/SEM, N/DJN, N/DJS, N/DJWI, N/LAT, N/TEC...)
RICHMOND, Va. -(Dow Jones)- Intel Corp. expects fourth-quarter revenue to grow by 8% to 10% compared with third-quarter revenue.
In a speech before the Richmond Society of Financial Analysts Thursday night, Alex Lenke, Intel's Investor Relations manager, said the previous estimate for fourth-quarter revenue growth had been 3% to 5%. For the third quarter ended Sept. 30, Intel reported revenue of $6.73 billion.
During what was mostly an upbeat presentation, Lenke also said that he sees fourth-quarter gross margins "up a couple points" from 52.6% in third quarter.
Fourth-quarter expenses are expected to be 8% to 10% higher than third-quarter expenses of about $1.4 billion.
During Q&A following his presentation, Lenke said some analysts are starting to think that first and second quarter of 1999 will be stronger than expected because many people may opt to buy new PCs rather than worry about potential Y2K problems.
"No one's sure because the first and second quarters are generally weak quarters," he said. "We'll see."
Next year will also see Intel gradually shift to .18-micron chips from the current industry standard of .25 microns, Lenke said. Intel also will increase the size of the chip wafers it produces to 300mm from 200mm. Lenke said the 300mm wafers are more efficient because they produce 2.5 times the number of chips of a 200mm wafer at 1.2 to 1.5 times the cost.
(PRE Comment - no time frame was mentioned}
Intel also will focus more on the Internet in 1999, Lenke said. In addition to having chips in PCs that access the Internet, Lenke said Intel will try and improve its position in the server market.
Currently about 75% to 80% of Internet servers use Intel chips. But most of those servers are priced below $10,000. Lenke said Intel will now go after the upper end of the server market, or those costing between $10,000 and $50,000.
Looking at new chips, Intel is expected to introduce its 500MHz Tanner chip for servers and work stations in first half 1999. It will be followed in second half 1999 by the 600MHz Cascades chip.
For PCs, Intel will launch its 500MHz Katmai chip in first half 1999, followed by the 600MHz Coppermine chip in second half 1999. During first half of 1999 Intel also plans to launch its 400MHz Celeron processor chip.
On the mobile PC front, Intel plans to deliver the 366MHz Mobile Pentium II processor in first half 1999, followed by the even more powerful 600MHz Mobile Coppermine processor in second half 1999. Currently, Intel's most powerful chip for mobile PCs is 300MHz, Lenke said.
For the set-top box and handheld computer market, Intel will focus on its StrongArm family of processors during 1999. Like many companies, one reason Intel is focusing on the Internet so much is the increased predictions for the growth of electronic commerce. Lenke quoted a Commerce Dept. report that said Internet commerce could surpass $300 billion by 2002. And like other businesses, Intel is trying to encourage its customers to do business online. Lenke said that currently about $1 billion a
month of Intel's business is transacted over the Internet. By year-end, Intel will have its top-20 customers doing most of their business through the Internet.
"It's not hard to get them to switch because it's so much cheaper," he said.
Other factors fueling Intel's growth include the fact that the home PC replacement rate has fallen from 5.1 years in fourth quarter 1996 to 4.3 years in fourth quarter 1997. It's even lower today, Lenke said, with some people replacing their PCs every two years.
And despite various economic crises, Asia continues to be a growing market for Intel. The one weak spot in Asia remains Japan, Lenke said.
"China will be bigger than Japan in 1999 barring any major changes at the last minute," he said.
And Intel continues to develop new technology even before the latest product hits the market, Lenke said. Like other chip makers, Intel is already working on .13-micron, .10-micron and even .07-micron chips.
- Mark Yost; 804-698-7385.
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