Intel's 1Q earnings slip 2.2%, but are above the estimates

April 16, 2003|By BLOOMBERG NEWS

SANTA CLARA, Calif. - Intel Corp., the world's biggest computer chip maker, said yesterday that its first-quarter profit declined 2.2 percent as sales of flash-memory chips used in mobile phones dropped.

Net income fell to $915 million, or 14 cents a share, from $936 million, or 14 cents, in the same period a year earlier, Chief Financial Officer Andy Bryant said. Revenue decreased 0.4 percent to $6.75 billion from $6.78 billion.

Some memory-chip customers switched to rivals after Intel raised prices by 20 percent to 40 percent, Bryant said. Revenue this quarter will rise to $6.4 billion to $7 billion, from $6.32 billion in the year-earlier period.

"It's a little bit encouraging to see small upside surprises instead of small downside surprises," Bryant said.

Excluding some costs, Intel had been expected to earn 12 cents a share on sales of $6.7 billion in the quarter.

The earnings announcement came after the close of the regular session on the Nasdaq stock market. Intel shares fell 3 cents to $17.13 in the regular session, then rose nearly a dollar in extended trading. The stock dropped 50 percent in 2002 and rose 4.6 percent in the first quarter.

Gross profit margin, or the percentage of sales left after subtracting manufacturing costs, will be 50 percent, plus or minus a couple points, in the second quarter, Intel said. The margin in the first period was 52 percent, at the high end of Intel's forecast, expanded by unexpected sales of reserved inventory and higher-than-expected sales of more expensive chips, the company said.

Intel, whose quarterly sales rose every period from 1990 to 1997, commands more than 85 percent of the market for personal computer processors. Chief Executive Officer Craig Barrett is trying to boost sales of chips for server computers and mobile phones to counter slowing demand for PCs.

The company is expected to earn another 12 cents a share on sales of $6.6 billion this quarter.

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