Intel says earnings tumbled 80%
No. 1 chip firm matches own revenue projections
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 5:05 PM ET Jan. 15, 2002
SANTA CLARA, Calif. (CBS.MW) -- Intel, the world's largest chipmaker, said late Tuesday its fourth-quarter profit dropped almost 80 percent from the same period last year, but the company exceeded analysts' bottom-line targets.
Sales fell 20 percent to $6.9 billion, matching the company's projections. Looking ahead, Intel said revenue could be flat or fall as low as $6.4 billion in the first quarter.
Also, Intel said it would spend less money on capital expenditures during 2002 than most analysts expected.
Ahead of the announcements, Intel (INTC: news, chart, profile) shares closed Tuesday down 16 cents to $34.68.
For the fourth quarter, Intel posted net income of $504 million, or 7 cents a share, compared with net income of $2.2 billion, or 32 cents a share, during the same quarter last year.
Revenue was $6.98 billion compared with $8.7 billion during the same quarter last year.
Excluding acquisition-related costs, income was 15 cents a share compared with 38 cents a share during the same quarter last year.
Analysts surveyed by Thomson Financial/First Call expected earnings, excluding charges, of 11 cents a share on revenue of $6.83 billion.
As recently as Dec. 6, Intel said its sales would be $6.7 billion to $6.9 billion. The company did not provide an earnings target for the just completed period.
Gross margin for the quarter was 51.3 percent compared with 62.9 percent during the fourth quarter last year and 46 percent during the third quarter.
Intel said it set a quarterly record for chip unit shipments used in computers. Also, chipset unit shipments and motherboard unit shipments rose sequentially.
For the first quarter
As for the first quarter and beyond, Intel said in a statement, "Continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters."
While the company said revenue should be $6.4 billion to $7 billion during the quarter, Intel did not provide an earnings target. It will host a midquarter update on March 7.
Gross margin should be 50 percent, plus or minus a couple of percentage points.
Also, expenses should remain flat sequentially at $2 billion to $2.1 billion compared with $2 billion in the fourth quarter.
Intel expects a net loss on equity investments of $50 million during the first quarter due to impairment charges.
Depreciation should be $1.1 billion and amortization should be $120 million during the new quarter.
For the new year
For the full year, gross margin is pegged at 51 percent compared with 49.1 percent during 2001 and 62.4 percent during 2000.
Spending on research and development during 2002 is targeted at $4.1 billion, up from $3.8 billion in 2001.
Capital spending for the new year should be $5.5 billion compared with $7.3 billion during 2001. Many analysts had expected a spending level between $6 billion and $7 billion.
Intel's spending on capital equipment comprises 25 percent of the total amount spent throughout the industry.
For the year, depreciation should tally $4.6 billion and amortization should run $440 million.
Chris Kraeuter is a reporter for CBS.MarketWatch.com in San Francisco.