SANTA CLARA, Calif. -- Intel Corp.'s binge of acquisitions in the past few months increased its revenues but dented its earnings in the third quarter of fiscal 1999, and the closely watched chip maker fell short of analysts' expecations.
Intel today reported quarterly revenues of $7.3 billion, up 9% from the same period a year ago, when it took in $6.7 billion. It was identical to the company's performance over the second quarter of fiscal 1999.
The figures include the post-acquisition revenue of companies acquired during the third quarter, which ended Sept. 25. Intel said that shipments of microprocessors, chip sets, and flash memory all grew to new records during the quarter.
However, Intel acquired four companies -- Dialogic, Level One Communications, Softcom Microsystems, and NetBoost -- for a total of over $3 billion during the quarter. After charges of approximately $450 million related to the acquisitions, Intel's profits were down 6% from the third quarter of 1998, to $1.5 billion, and down 17% sequentially. Earnings per share were 42 cents, down 5% from 44 cents a year ago and down 18% sequentially.
Excluding the acquisition-related costs, Intel's earnings per share were 55 cents, slightly lower than analysts' estimates, which were in the 57-60-cents range. That would have been an increase of 22% from 45 cents in the third quarter of 1998.
"Our microprocessor business was solid during the quarter," said Craig R. Barrett, president and CEO. "Revenues were up, units grew substantially to a new record, and we introduced a large number of new products across all market segments."
Barrett added that Intel expects "seasonally strong business" in the fourth quarter, surpassing the third quarter's revenue, and plans to ramp its Pentium III microprocessors on 0.18-micron technology.
"At the same time, we are accelerating our new business activities in networking, communications products, and online services, as illustrated by the number of acquisitions made in the third quarter," Barrett added. He did not indicate whether Intel would make more acqusitions in the near future.
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