Intel warns of lower than expected earnings

Intel says that weaker than anticipated demand for its processors will result in lower than expected first-quarter revenue and net income. When Intel announced its fourth-quarter 1997 results in January, the chip maker said it expected revenue for the first quarter of 1998, ending March 28, to be approximately flat with fourth-quarter 1997 revenue of US$6.5 billion. Intel now says it expects first-quarter revenue to be down approximately 10% from the fourth quarter.

Intel says that weaker than anticipated demand for its processors will result in lower than expected first-quarter revenue and net income.

When Intel announced its fourth-quarter 1997 results in January, the chip maker said it expected revenue for the first quarter of 1998, ending March 28, to be approximately flat with fourth-quarter 1997 revenue of US$6.5 billion. Intel now says it expects first-quarter revenue to be down approximately 10% from the fourth quarter.

Intel also says it has completed the merger of Chips and Technologies Inc. with its Intel Enterprise Corporation during the current quarter, and as a result will take a one-time non-deductible charge in the first quarter of approximately $165 million, or 9 cents per share, for a write-off of in-process research and development.

Intel now expects expenses for the first quarter of 1998 to be approximately 3 percent higher than the expenses of $1.4 billion in the fourth quarter of 1997. In January the company had said expenses would be about 2 percent to 5 percent lower than in the fourth quarter. The higher expenses, which in the end depend on revenue, result mainly from the one-time charge associated with the acquisition of Chips and Technologies, Intel said.

The Chips and Technologies purchase is also expected to raise Intel's research and development (R&D) expenses to about $3 billion for 1998, up from $2.3 billion in 1997. In January, expectations were that R&D spending in 1998 would be approximately $2.8 billion.

Intel's capital spending for 1998 is expected to be approximately $5.3 billion, up from $4.5 billion in 1997, the company said.

Intel, in Santa Clara, California, can be reached at http://www.intel.com/.

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