SANTA CLARA, Calif.--Amid deep and surprising cuts in its capital spending plans for 2003, Intel Corp. today reported better-than-expected 2002 fourth-quarter revenue of $7.2 billion, up 10% sequentially and up 3% year-over-year.
Fourth-quarter net income was $1.0 billion, up 53% sequentially and up 108% year-over-year. Earnings per share were $0.16, up 60% sequentially and up 129% from $0.07 in the fourth quarter of 2001.
The company beat Wall Street's projections, as it was supposed to earn $0.14 a share, according to Thomson First Call. Last month, Intel expected revenue for the fourth quarter to be between $6.8-to-$7.0 billion, as compared to the previous range of $6.5-to-$6.9 billion (see Dec. 5, 2002 story ).
Intel reported a 2002 third-quarter profit of $686 million, or $0.10 a share, on revenue of $6.5 billion. In the like period a year ago, Intel reported a profit of $504 million, or $0.07 a share, on sales of $7 billion.
"2002 ended with a strong quarter," said Craig R. Barrett, Intel chief executive," in a statement. "By successfully executing our strategies, it appears we have increased our market segment share in microprocessors, chipsets, graphics, motherboards, flash, PDA microprocessors and LAN-on-motherboard gigabit Ethernet connections," he said.
Intel also cut its capital spending--again. R&D spending for 2003, excluding in-process R&D, is expected to be approximately $4.0 billion, flat with 2002.
Capital spending for 2003 is expected to be between $3.5-to-$3.9 billion, as compared to $4.7 billion in 2002. Intel's semiconductor equipment spending is being primarily targeted at 300-mm wafer production, which is providing the company with greater capital efficiency and lower manufacturing costs, according to the Santa Clara-based company.
In November, the Santa Clara-based company lowered its capital spending plans to about $4.7 billion for 2002. The reductions were being driven by cost savings within various construction projects. In addition, the company is slightly reducing its fourth-quarter equipment spending by re-using certain equipment from older process technology (see Nov. 15, 2002 story ).
The future outlook for Intel looks mixed. Revenue in the first quarter is expected to be between $6.5-to-$7.0 billion. Gross margin percentage in the first quarter is expected to be 50%, plus or minus a couple of points, as compared to 51.6% in the fourth quarter of 2002.
Meanwhile, Intel's revenue for 2002 was $26.8 billion, up 1% from $26.5 billion in 2001. Net income was $3.1 billion, up 141% from $1.3 billion in 2001. Earnings per share were $0.46, up 142% from $0.19 in 2001. The 2001 results reflect charges for the amortization of goodwill.
During a conference call with analysts on Tuesday afternoon, executives from Intel were pleased about the company's performance in the fourth quarter of 2002,.
"The fourth quarter was a strong quarter for Intel," said Paul Otellini, president and chief operating officer of the chip giant. "Microprocessors grew to an all-time record," said Otellini in a conference call with analysts here today.
By geographic region, Intel experienced strong growth in Europe, followed by Asia. "Europe was strong in every respect, especially Russia," he said. "Sales into China are strong. Japan also bounced back."
Going forward, Intel seemed less sure about the future. Seasonal patterns are expected to cause a slight drop in terms of sales, earnings, and unit shipments for the first quarter of 2003, he said.
Corporate spending for PCs remains an uncertainty for 2003. "There are some strong points of light, but there's not a clear pattern," he said.
On the product front, the Intel executive also said the company began shipping its next-generation mobile processor in the market last month, with plans to officially introduce the chip in March.
Last month, Intel announced that "Centrino" would be the brand name for its forthcoming wireless mobile computing technology. The "Centrino" brand would represent the combination of a microprocessor, formerly code-named "Banias", related chip sets and wireless networking to the IEEE 802.11 standard.
The company also plans to bolster its processor lines for desktops and servers. "We are not pulling back on the gigahertz race," he said, "but we will add features beyond performance."
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