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Intel First-Quarter
Revenue $9.4 Billion
Earnings Per Share 34 Cents
/noticias.info/ SANTA CLARA, Calif., April 19, 2005 – Intel
Corporation today announced first-quarter revenue of $9.4 billion, up
17 percent year-over-year and down 2 percent sequentially.
First-quarter net income was $2.2 billion, up 25 percent
year-over-year and up 1 percent sequentially. Earnings per share were
34 cents, up 31 percent from 26 cents in the first quarter of 2004 and
up 3 percent from 33 cents in the fourth quarter of 2004. Intel’s
first quarter included an additional week of business because 2005 is
a 53-week fiscal year for the company. Last year’s first-quarter
results included a legal settlement charge that reduced earnings per
share by 1.7 cents.
“Led by strong demand for our mobile products, Intel posted
double-digit revenue and profit growth versus a year ago,” said Intel
CEO Craig Barrett. “Today marks the 40th anniversary of Moore’s Law,
which remains the driving force behind our ability to continually
innovate and bring exciting new products to our customers around the
world. In the coming quarters we expect to carry on the pace set over
past decades by ramping our industry-leading 65nm process technology
and launching additional dual-core microprocessors for our desktop,
notebook and server platforms.”
During the quarter, Intel announced a broad reorganization bringing
all major product groups in line with the company’s strategy to
develop and deliver complete technology platforms based on Intel
ingredients. Intel’s goal is to change its operating segment
presentation to reflect the company’s new organizational structure
beginning with its Form 10-Q for the first quarter of 2005. The
Digital Enterprise Group and Mobility Group will be reportable
segments under the new structure, while the Digital Home Group,
Digital Health Group and Channel Platforms Group are expected to be
included in the “all other” category.
BUSINESS OUTLOOK
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. Please see the Risk Factors Regarding Forward-Looking
Statements in this release for a description of certain important risk
factors that could cause actual results to differ, and refer to
Intel’s annual and quarterly reports on file with the Securities and
Exchange Commission (SEC) for a more complete description of the
risks. These statements do not include the potential impact of any
mergers, acquisitions, divestitures or other business combinations
that may be completed after April 18, 2005.
Revenue in the second quarter is expected to be between $8.6 billion
and $9.2 billion.
Gross margin percentage for the second quarter is expected to be
approximately 56 percent, plus or minus a couple of points, as
compared to 59.3 percent in the first quarter. The gross margin
percentage expectation for 2005 is now 59 percent, plus or minus a few
points, as compared to the previous expectation of 58 percent, plus or
minus a few points. The gross margin percentage could vary from
expectations based on changes in revenue levels, product mix and
pricing, manufacturing yields, changes in unit costs, variations in
inventory valuation, excess or obsolete inventory, capacity
utilization and the existence of excess capacity, impairments of
long-lived assets, including manufacturing, assembly/test and
intangible assets, and the timing and execution of the manufacturing
ramp and associated costs, including start-up costs.
Expenses (R&D plus MG&A) in the second quarter are expected to be
approximately $2.6 billion. Expenses, particularly certain marketing
and compensation expenses, could vary from expectations depending on
the level of demand for Intel’s products and the level of revenue and
profits.
The R&D spending expectation for 2005 is unchanged at approximately
$5.2 billion.
Capital spending for 2005 is now expected to be between $5.4 billion
and $5.8 billion, higher than the previous expectation of between $4.9
billion and $5.3 billion, driven primarily by stronger than
anticipated business and increased confidence in the company’s 65nm
process technology ramp.
Gains from equity investments and interest and other in the second
quarter are expected to be approximately $70 million.
The tax rate for the second, third and fourth quarters is currently
expected to be approximately 31 percent. This expectation does not
reflect the impact of any potential repatriation of cash under the
American Jobs Creation Act. The tax rate expectation is based on
current tax law and current expected income and assumes Intel
continues to receive tax benefits for export sales. The tax rate may
be affected by the closing of acquisitions or divestitures, the
jurisdiction in which profits are determined to be earned and taxed,
changes in the estimates of credits, benefits and deductions, the
resolution of issues arising from tax audits with various tax
authorities and the ability to realize deferred tax assets.
Depreciation for the second quarter is expected to be $1.1 billion,
plus or minus $100 million. The depreciation expectation for the full
year is unchanged at $4.4 billion, plus or minus $100 million.
Amortization of acquisition-related intangibles and costs is expected
to be approximately $35 million in the second quarter and
approximately $125 million for the full year.
FIRST-QUARTER REVIEW AND RECENT HIGHLIGHTS
Financial Review
The gross margin percentage was 59.3 percent, higher than the revised
expectation of 57 percent, plus or minus a point, primarily due to
better than anticipated microprocessor mix and costs along with
earlier than anticipated shipment qualification of certain new
products.
Intel used $2.5 billion in cash to repurchase 107.9 million shares of
its common stock during the quarter under an ongoing program.
The company paid a cash dividend of 8 cents per share on March 1 to
stockholders of record on February 7. The company’s board of directors
last year approved a doubling of the company’s quarterly cash dividend
to 8 cents per share.
Key Product Trends (Sequential)
Total microprocessor units and the average selling price were
approximately flat. Mobile microprocessor units set a record.
Chipset units were lower.
Motherboard units were lower.
Flash memory units were lower.
Wireless connectivity units set a record.
Wired connectivity units were lower.
Digital Enterprise Group
For servers, Intel introduced a new line of 64-bit Intel® Xeon™ MP
processors, which support servers with four or more processors, along
with a new four-processor platform for mid-tier servers. The new
four-processor platform includes the new Intel® E8500 chipset, which
supports higher front-side bus speeds, dual-channel DDR2 system
memory, PCI Express I/O support, and enhanced power management
technologies that help lower utility costs.
The Intel 8500 chipset will also support future dual-core Intel Xeon
processors along with Intel® Virtualization Technology, which will
help users run multiple operating system environments simultaneously.
The company has accelerated the Intel Virtualization Technology
program by releasing a preliminary specification to developers and is
planning to include support in desktop processors and chipsets this
year, one year earlier than previously planned. The company introduced
the Intel® IOP333 I/O storage processor based on Intel XScale®
technology, which offers enhanced RAID 6 storage capabilities that
protect against dual-disk failures.
Intel boosted the performance of its 64-bit Intel Xeon processor for
volume servers by doubling the processor’s cache memory to 2 MB. The
64-bit Intel Xeon processor-based platform has become the company’s
fastest ramping server platform ever, with over two million processor
unit shipments in its first eight months of availability.
Fujitsu* chose the Itanium® 2 processor for its new Primequest* line
of mainframe-class enterprise servers that combines data center-class
reliability and scalability with affordable, standards-based
technology. In addition, Intel announced plans to introduce a version
of its Intel Virtualization Technology for Itanium-based platforms
later in the year.
The company also announced the Intel® Software Network, which gives
programmers the development tools, training and advice needed to
accelerate the development of applications that take advantage of
Intel multi-core processors with 64-bit computing capability.
For clients, Intel introduced the company’s first PC platform based on
a dual-core microprocessor. Designed for PC power users, the new
platform includes the Pentium® Processor Extreme Edition 840, which
provides two processor cores and Hyper-Threading (HT) Technology,
allowing up to four software threads to run simultaneously. The
platform also includes the Intel® 955X Express Chipset, which features
Intel® High Definition Audio along with support for dual-channel DDR2
memory, up to 8 GB of system memory, PCI Express devices and RAID disk
drives. The company announced plans to deliver a dual-core Intel®
Pentium® D processor-based platform for mainstream PCs later in the
second quarter.
Intel also introduced five new microprocessors that bring 64-bit
capability to Intel processor-based desktop PCs. The Pentium® 4
processor Extreme Edition 3.73 GHz with HT Technology features a 1,066
MHz front-side bus and 2 MB of L2 cache memory for increased
performance. New Pentium 4 processors in the 6XX sequence offer 64-bit
computing capability, HT Technology, a 2 MB cache, Enhanced Intel
SpeedStep® Technology and Execute Disable Bit technology. Intel also
announced plans to make the 64-bit capability available throughout its
desktop processor line this year, including in Celeron® D processors.
Mobility Group
The company introduced a new Intel® Centrino™ mobile technology
platform for notebook PCs. Based on new Pentium® M processors, the
mobile Intel® 915 Express chipset, Intel® PRO/Wireless 2915ABG
wireless LAN components and network connection software, the new
platform is expected to be adopted in more than 150 different notebook
designs ranging from wide-screen, 17-inch systems to small,
lower-power machines weighing less than three pounds. New platform
features include higher-quality integrated graphics, Intel
High-Definition Audio, Enhanced Intel SpeedStep Technology, Display
Power Saving Technology 2.0, a faster front-side bus and support for
DDR2 memories and PCI Express peripherals.
The company introduced Intel StrataFlash® Embedded Memory, bringing
the high performance, high density and cost-effectiveness of Intel’s
multi-level cell flash technology to embedded applications. Available
in densities ranging from 64Mb to 512Mb today, with 1Gb becoming
available in the second quarter, the new devices are Intel’s lowest
cost-per-bit flash solutions for market segments including consumer
electronics, industrial automation and wire-line communications. Intel
also began shipping its first 90nm flash products and shipped samples
of its first 90nm flash memory with multi-level cell technology,
code-named Sibley. The company also introduced new software for
handsets based on Intel flash memory that helps accelerate the storing
of large files such as digital photos, music and video.
Intel had record shipments of application processors for cellular
phones, with unit sales nearly doubling from the first quarter of last
year as designs from customers including Motorola*, Palm* and Samsung*
ramped in volume.
Intel also introduced its first WiMAX component, designed for use in
modems that connect homes and businesses to emerging WiMAX-based
wireless broadband networks. Formerly code-named Rosedale, the Intel®
PRO/Wireless 5116 broadband interface is being designed into products
from 11 of the industry’s leading equipment providers. In conjunction
with the product announcement, 14 telecommunications service providers
from around the world announced plans to work with Intel in bringing
WiMAX networks to the marketplace.
During the quarter, Intel and Alcatel* announced plans to conduct
WiMAX field trials involving fixed, nomadic and mobile deployments. In
addition, Intel and ZTE*, China’s largest telecommunications equipment
provider, announced plans to develop WiMAX solutions based on Intel
silicon. The companies will promote WiMAX specifications and work with
regulators in key global markets to secure spectrum for WiMAX
networks.
Digital Home Group
Intel completed the acquisition of Oplus Technologies*, a leading
provider of video processing products and technologies for digital
televisions and displays. The acquisition, which closed in the
beginning of the second quarter, provides Intel with technologies that
can complement its growing portfolio of consumer electronics (CE)
ingredients and platforms.
The company also introduced the Intel® 854 Chipset and development
platform for CE devices such as Internet protocol-based digital
set-top boxes and digital media recorders. The Intel 854 chipset
includes Intel Extreme Graphics 2 technology for rich graphical user
interfaces and supports Intel’s Celeron® M, Pentium M and Pentium 4
processors. Toshiba announced plans to introduce a high-definition DVD
player based on the Intel 854 chipset later this year.
Technology and Manufacturing Group
During the quarter, Intel demonstrated working samples of its first
65nm microprocessor designs for notebook and desktop platforms. The
company remains on schedule to ship 65nm microprocessors during the
year with volume ramping in four 300mm factories in 2006. The company
also announced plans to build a second assembly and test factory in
Chengdu, China.
Intel scientists announced a breakthrough in which standard
manufacturing processes were used to create the world’s first
continuous-wave silicon laser. The technology could lead to low-cost,
high-quality lasers and optical devices for use in computing,
communications and medical applications. In addition, researchers from
Intel and QinetiQ* announced they have successfully built “quantum
well” transistors that provide fast switching performance at low power
levels. The technology co uld become a promising candidate for making
microprocessors in the middle of the next decade.
EARNINGS WEBCAST
Intel will hold a public webcast at 2:30 p.m. PDT today on its
Investor Relations Web site at www.intc.com. A replay of the webcast
will be available until July 19.
STATUS OF BUSINESS OUTLOOK AND MID-QUARTER BUSINESS UPDATE
During the quarter, Intel’s corporate representatives may reiterate
the Business Outlook during private meetings with investors,
investment analysts, the media and others. Intel intends to publish a
Mid-Quarter Business Update on June 9. From the close of business on
June 3 until publication of the Update, Intel will observe a “Quiet
Period” during which the Business Outlook disclosed in the company’s
press releases and filings with the SEC on Forms 10-K and 10-Q should
be considered to be historical, speaking as of prior to the Quiet
Period only and not subject to update by the company. For more
information about the Business Outlook, Update and related Quiet
Periods, please refer to the Business Outlook section of Intel’s Web
site at www.intc.com.
RISK FACTORS REGARDING FORWARD-LOOKING STATEMENTS
The statements in this document that refer to plans and expectations
for the second quarter, the year and the future are forward-looking
statements that involve a number of risks and uncertainties. Many
factors could affect Intel’s actual results, and variances from
Intel’s current expectations regarding such factors could cause actual
results to differ materially from those expressed in these
forward-looking statements. Intel presently considers the factors
accompanying certain of such statements above and set forth below to
be the important factors that could cause actual results to differ
materially from Intel’s published expectations. A more detailed
discussion of these factors, as well as other factors that could
affect Intel’s results, is contained in Intel’s SEC filings, including
the report on Form 10-K for the year ended Dec. 25, 2004.
Intel operates in intensely competitive industries. Revenue and the
gross margin percentage are affected by the demand for and market
acceptance of Intel’s products, the availability of sufficient
inventory to meet demand, pricing pressures and actions taken by
Intel’s competitors, and the timing of new product introductions.
Factors that could cause demand to be different from Intel’s
expectations include changes in customer order patterns, including
order cancellations, changes in the level of inventory at customers,
and changes in business and economic conditions.
Gains or losses from equity securities and interest and other could
vary from expectations depending on equity market levels and
volatility, gains or losses realized on the sale or exchange of
securities, impairment charges related to marketable, non-marketable
and other investments, interest rates, cash balances and changes in
fair value of derivative instruments.
Intel’s results could be impacted by unexpected economic, social and
political conditions in the countries in which Intel, its customers or
its suppliers operate, including security risks, possible
infrastructure disruptions and fluctuations in foreign currency
exchange rates.
Intel’s results could also be affected by adverse effects associated
with product defects and errata (deviations from published
specifications), and by litigation or regulatory matters involving
intellectual property, stockholder, consumer, antitrust and other
issues, such as the litigation and regulatory matters described in
Intel’s SEC reports. |
