Feeds

Intel cagey on recovery

Despite better than expected Q4

  • alert
  • submit to reddit

Gartner critical capabilities for enterprise endpoint backup

ComputerWire: IT Industry Intelligence

Intel Corp yesterday further fueled expectations that the PC industry may be doing better than expected, when it reported fourth quarter results that hit the high end of its earlier guidance -

Joe Fay writes

.

However, the company resisted analysts' calls to stake out its expectations for the year ahead, refusing to forecast more than a seasonal pattern of sales for the current quarter and a recovery some time later this year.

The company turned in sales of $6.98bn for the quarter ending December 31, down 19.8% on the year. In December, the company raised its revenue guidance to $6.2bn to $6.8bn. Operating income was down 60.9 per cent to $1bn, while net income was off 77 per cent to $504m. On a proforma basis, excluding acquisition costs, net income was $998m, compared to the previous year's $2.6m. This generated earnings per share of $0.15. Wall Street had expected earnings of $0.11 per share.

The lack of earnings warnings from major PC vendors since the close of 2001 has prompted speculation that sales in the fourth quarter were better than had been expected and that a PC recovery may be in the offing.

Andy Bryant, Intel's CFO, said the Santa Clara, California-based company was "pleased to report 2001 is over". Nevertheless, he was cautious about building hopes up too far for the year ahead.

He predicted that the company would turn over between $6.4bn and $7bn in the first quarter, with gross margin at 50per cent plus or minus a couple of points, compared to 51 per cent in the first quarter. The company expects the first quarter performance to be "seasonal", bar any unexpected developments in the economy at large.

However, the company was more cryptic on its long-term expectations. Bryant refused to go into detail on the likely performance of either the company or the economy for the rest of the year. However he did say the company was going into the first quarter with a strong order book and said the company was "thinking in terms of a recovery some time after the first quarter".

At the same time, the company is continuing to scale up its infrastructure. Paul Otellini, executive vice president and general manager of the Intel Architecture Group, said it was "putting in capacity plans on the basis it can meet demand in a recovery."

Despite the firm's emphasis on new capacity, which will see an accelerated shift to 0.13 micron processes this year, to be followed by a large scale move to 300mm wafer production next year, the company gave chip equipment vendors little in the way of comfort. Capital expenditure this year is expected to be $5.5bn, compared to $7.3bn last year. Nevertheless, 85% of this amount will go towards investing in manufacturing.

Once again, it was Intel's core processor business, the Intel Architecture Group, that underpinned the company's performance in the fourth quarter, turning in $5.8bn of sales, and $1.8bn of operating profit, making it the only division not to turn in a loss. The Intel Communications Group turned in a $129m loss on sales of $590m, while the Wireless Communications and Computing Group lost $20m on sales of $518m.

For the full year, sales were $26.5bn, down 21.3%, with net income of $1.3bn, down 87.7%. On a proforma basis net income was $3.6bn, down from $12.1bn the previous year.

© ComputerWire.com. All rights reserved.

The essential guide to IT transformation

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.