Intel makes more money than playing Monopoly
Who can save us now from the Great Satan of Chips?
Intel caught analysts cold with a superb set of Q4 results, smashing in-house records for revenue, earnings per share, net income, and shipments in all territories -- including the blighted Asia Pacific. Giving the FTC and conspiracy theorists something substantial to chew their teeth on, Intel declared total 1998 sales of $26.3 billion, up 5 per cent on 1997, and net income of $6.1 billion, down 13 per cent on the previous year. All the bad news for Intel took place in the first half of the year. The company hailed a storming Q4 and noted seasonally strong demand for P6 parts in the second half. Q4 revenue of $7.6 billion was up 17 percent from fourth quarter 1997 revenue of $6.5 billion. Fourth quarter revenue was up 13 percent from third quarter 1998 revenue of $6.7 billion. Record fourth quarter net income of $2.1 billion was up 18 percent from fourth quarter 1997 net income of $1.7 billion. Net income in the fourth quarter was up 32 percent from third quarter 1998 net income of $1.6 billion. The Register thought Intel’s X.86 clone rivals were supposed to putting up a serious challenge for the budget market. If so, it certainly isn’t reflected in Intel’s results. The way things are going, 1999 will better for Intel. It enters 1999 with a full roadmap for every market segment, and with its current batch of Celerons, it has low-end chips that OEMs actually want to buy. PC shipments are projected to rise more than 15 per cent this year, according to the Nomura Research Institute -- and we can reasonably assume that Intel will power the lion’s share of these machines. Intel anticipates a gross margin of 57 per cent for 1999, compared with 54 per cent for all of 1998 – suggesting it expects strong sales for high-end, high margin Pentium III and Pentium III Xeon sales during the year. The Great Satan of chips is also turning the screws on its rivals on the technology front. CEO Craig Barrett said the company will soon begin the transition to 0.18 micron manufacture. It is also pumping in $3 billion into R&D, up from $2.7 billion in 1998. The company is putting some brakes on capital spending in 1999, setting aside a budget of only $3 billion. In 1998, capital spending was $4 billion -- although this amount included $475 million of capital assets bought from Digital. The smaller budget for 1999 is "primarily a result of reduced investment for new facilities and improved utilization of manufacturing equipment". ®
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