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Intel warns of tough times in Q1

Completes record year

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Intel just beat lowered sales estimates for the fourth quarter, while warning of tough times ahead for the start of 2001.

The chip giant saw revenue rise six per cent to $8.7 billion for the quarter. Net income excluding acquisition costs for Q4 was $2.6 billion, up ten per cent from the same period in 1999, but down nine per cent sequentially. Earnings were 38 cents a share.

Last month Intel warned it would not meet forecasts for the fourth quarter, causing analysts to lower earnings expectations to 37 cents a share.

For the full year 2000, the California company saw sales of $37 billion, up 15 per cent on the previous year. Net income excluding acquisition costs was $12.1 billion, up 49 per cent.

Today it said first quarter sales would be down at least 15 per cent on Q4 - ten per cent worse than normal - "due to seasonal factors and the impact of slowing worldwide economies". Gross margin percentage for Q1 is expected to be 58 per cent, down from 63 per cent in Q4.

But Intel still expects to keep pumping cash into its R&D - it plans to spend $4.3 billion on this area of its business in 2001, up from $3.9 billion in 2000. Capital expenditure is expected to rise to $7.5 billion from $6.7 billion.

"This was a year of record annual revenue and earnings; yet, slowing economic conditions impacted fourth quarter growth and are causing near-term uncertainty," said Intel president and CEO Craig Barrett.

He added that the company was confident of its business strategy and competitive position. ®

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