Intel's earnings exceed all the estimates

Quarter comes in at 69 a share, and stock jumps to $97

Computer chips

January 14, 2000|By BLOOMBERG NEWS

SANTA CLARA, Calif. -- Intel Corp., the world's No. 1 computer-chip maker, said late yesterday that its fourth-quarter profit topped the highest forecasts as personal computer makers bought a record number of microprocessors and prices rose.

Intel shares gained 6.5 percent to a record $97 in after-hours trading after the company said its net income, excluding acquisition expenses, increased 15 percent to $2.4 billion, or 69 cents a share, from $2.08 billion, or 60 cents a year earlier. The highest analysts' forecasts were for profit of 67 cents.

With acquisition expenses included, the net rose 2.1 percent to $2.11 billion, or 61 cents a share, from $2.06 billion, or 59 cents.

Sales climbed 7.9 percent to a record $8.21 billion as purchases of PCs using Intel chips surged during the holiday and back-to-school seasons, and the company made faster chips that sold for higher prices than in the third quarter. It was the first time in four quarters that Intel did not disappoint investors looking for better sales, earnings or profit margin.

"Finally, they had a decent quarter," said Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray, who rates Intel shares a "strong buy." "The sun might finally be shining on them."

Intel shares surged as high as $97 after the report. They had fallen 18.75 cents to $91.0625 in regular Nasdaq stock market trading. The shares have climbed about 32 percent in 12 months.

Analysts polled by First Call/Thomson Financial expected profit of 63 cents on average.

"They knocked the cover off the ball," said Christian Koch, senior technology analyst at Trusco Capital Management in Atlanta, which owns 5 million Intel shares.

Intel's results improved mostly because the company was able to ship more chips made with new technology that lets it make more powerful chips at lower cost. Intel unveiled 17 chips based on the 0.18-micron manufacturing process. The transistors and connectors on chips made with that system are 1/1000 the thickness of a human hair. Older chips had 0.25-micron features.

The company said it expects first-quarter revenue to be "slightly down" from the fourth quarter. Sales usually fall the quarter after the holiday season. For Intel to say sales will fall only slightly is a good sign, analysts said, because the company's forecasts are considered conservative. "They tend to be cautious," said Kumar.

In another sign that Intel expects the market to remain healthy, the company said it will boost spending on new plants and equipment to $5 billion in 2000 from $3.4 billion in 1999. That is good news for suppliers of chip-manufacturing equipment such as Applied Materials Inc. and Novellus Systems Inc.

Intel said it expects gross margin -- the percentage of sales left after manufacturing costs are subtracted -- to be about 61 percent in 2000 compared with 59.7 percent in 1999. The company predicted that sales of its chips and other products used in networking, communication and wireless equipment would rise 50 percent or more this year.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.