Intel Q1 earnings up 58 %

Intel has reported first-quarter earnings of $US2 billion, or 57 cents per share, a 58% increase over its earnings a year ago and slightly more than Wall Street predicted. Intel's revenue for the first quarter, which ended March 27, was $7.1 billion, up 18% over first-quarter revenue of $6 billion for the same period a year ago.

Intel has reported first-quarter earnings of $US2 billion, or 57 cents per share, a 58% increase over its earnings a year ago and slightly more than Wall Street predicted.

Intel's revenue for the first quarter, which ended March 27, was $7.1 billion, up 18% over first-quarter revenue of $6 billion for the same period a year ago. Last year, first quarter earnings were $1.3 billion, or 36 cents per share.

This year's figures were adjusted for a two-for-one stock split paid to stockholders on April 11.

Intel's first quarter results came in as expected, Paul Otellini, executive vice president of the Intel Architecture Business Group, said during a conference call . Steady product shipment and the refreshing of its Pentium processor lines had a strong impact on the company's quarterly earnings, according to Otellini.

The traditional first-quarter lull was reflected in the lower number of microprocessors, processor and chips sets that shipped, said Otellini. "Intel took advantage of the time to refresh its processing lines and to position itself for future growth," he said.

Intel's cost reduction program and decline in quarterly spending and marketing expenses also played an important part in making Intel's first quarter a financial success, according to Andy Bryant, Intel senior vice president and chief financial officer.

Some of Intel's major product launches during the first quarter included: volume shipment of its 500MHz Pentium III Xeon processor; shipping of Gateway 2000 servers based on the Xeon processors; refreshed mobile products; and the announcement of its latest Celeron Pro, which is expected to ship later this month.

"The Pentium III has been Intel's fastest ramping product in the history of stand-alone processors," said Otellini. Intel plans to ship the 550MHz Pentium III Xeon processor during this quarter.

Intel is also pleased with the continued success of its Pentium II, introduced last year, and has no plans to stop producing that chip anytime soon, said Otellini. "We will stop producing the Pentium II when our customers stop asking for it."

Regionally, Intel saw significant quarter-over-quarter growth in Japan, Taiwan and China, according to Otellini. In the Asia-Pacific region revenue grew to 22%, up 2% from the year-ago quarter. Meanwhile, Japan's revenue rose back to 8%, also seen in the first quarter of 1998, after seeing a dip to 6% in the previous quarter.

In Asia, the Pentium II and Celeron were the top selling systems, according to Intel. "You can buy a higher-performance system for less money there than anywhere else," Otellini said.

In Japan there has been a bit of a shake up in terms of local demand for processors, he said, adding "Companies are waking up to Y2K demands."

In Europe and the U.S. sales were traditionally down in the first quarter as the company had expected, Otellini said. First-quarter revenue dipped in Europe to 28%, down from 30% in the year-ago quarter; while revenue in the Americas dropped to 42% from 43% last year.

"Going forward there are a number of uncertainties and Intel will continue planning product lines assuming that normal seasonality will occur," Otellini said. Intel expects see its revenue at flat or slightly down in its second quarter.

Specifically, the company expects its gross margin to be 57%; its capitol spending to be 6% to 10% higher; and its revenue tax rate to be at 33%, according to Intel's CFO Bryant.

Not surprisingly, Intel is a strong advocate of the PC as the principle computing interface and connection to the Internet, Otellini said. Intel is focusing efforts on keeping the PC as "the prime Internet viewing device of choice."

Analysts polled by First Call predicted Intel would report first-quarter earnings per share of 55 cents.

Meanwhile, Intel's stock was down .75 to $60.50 today.

Intel, in Santa Clara, California can be reached at +1-408-987-8080, or at http://www.intel.com/.

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