Chipzilla beats chest as its Q4 beats Wall Street

The Intel miracle continues...

Analysis You have to give Intel credit for at least using the technology that it sells. Thanks to the miracle of the Wibbly Wobbly Web, we were able to sit through one and a half hours of its conference call yesterday evening and didn't even have to download the top-heavy Real Player in order to do so. Those on the Intel side of the equation, financial officer Andy Bryant and architectural senior VP Paul Otellini were mercifully brief with their opening statements. But that could not be said of the long string of financial analysts, each of whom seemed to want to first start a question by sucking up to Intel and congratulating the firm on how well it had done for its fourth financial quarter. Perhaps some kind journalistic colleague in the US could give them some press training, and so make it easier for them to get to the point a bit quicker. Not that Chipzilla didn't do well, it did. A close reading of the official statement it put out, coupled with Otellini's and Bryant's comments show that this chip giant is, as we've pointed out many times before, not going to roll over and stick its paws in the air just because it's got Jerry Sanders III snapping at its heels. Coppermines, Celerons, chipsets and Rambus Ink The financial statement contented itself with stating the bare facts as they stood -- that is the introduction of the 820 and the 840 chipsets, and the seventeen Coppermines it intro'd on the 25th of October last. The conference call was more revealing, both in terms of what Intel calls "supply tightness" (shortages) and about its current and future chipset strategy. It is obvious from the answers to the questions that Intel had, indeed, been caught short not only on the Coppermine front but also with chipsets. In fact, it had jumbled up the entire product mix on the microprocessor front, finding itself over-producing low end microprocessors and under-producing the high end Coppermines it could have sold in swathes in the run up to the holiday season. However, the good news for Intel fans, and we have had this confirmed by its customers, is that after much puffing and blowing, its ramp of .18 micron technology is now much better. Intel is now producing stacks of .18 micron parts, but is still a little constrained at the low end. Our informationis that it has now opened its fifth fab on the .18 micron process and most of the supply problems will be fixed by the beginning of February. Otellini was asked whether the 533MHz Celeron Intel introduced at the beginning of the year was the last of the .25 micron process. He did not answer this directly, but instead said that his company will produce Celerons using the newer, integrated technology (that's Coppermine cores to you and me folks), during the first half of this year. That, we think, is a yes. And Intel also has highly ambitious plans for its Timna, system-on-a-chip processor, which Otellini seemed to suggest would arrive, in bulk, in time for this year's Christmas bonanza. When asked about the Rambus i820 chipset, the Intel panel would not be drawn about its share of the market, but did imply, rather than directly say, that it was PC vendors which had forced the move. Networking, mobile and the rest While the conference call had little to say about these topics, CEO Craig Barrett made a point of noting high up in Intel's official press release: "This year we expect to grow revenues in our networking, communication and wireless businesses by 50 per cent or more." This is part of Intel's plan to be a "building block" company for the Internet -- a lucrative area of potential business which it will also use to sell its microprocessors. During 1999, Intel is expected to major on its IA-64 Itanium Merced platform as a suitable platform for all sort of Internet related projects. Mobile telephony, the Web appliances it announced a week or two back, and more run-of-the-mill networking products will form part of this push. Intel bought 12 companies in its 1999 financial year, and it still has a big cash pot for future investments. Barrett claims he has also succeeded in cutting expenses and that this trend will continue into the first quarter of its year 2000 reporting period. However, there are significant capital costs in the offing. While executives at the conference call were a little vague about when Intel would move to a .13 micron process technology, they seemed to imply that this was likely to happen over the next two or three years and in and of itself would represent significant capital investment. Intel was even vaguer about how fast it will move to 300mm (12-inch) wafer technology, although it seems firmly committed to so doing. While the Itanium-Merced will be used as lever for its "building block" strategy, it appears that Intel wants to get the first IA-64 systems out of the door, and is reluctant to talk about future IA-64 technology, including McKinley, until it has Merced out of the way. See also Intel performs well in Q4, ramps up .18 micron

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