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By John G. Spooner, 15 January 2003 08:25

NEWS Intel has reported better-than-expected earnings for its fourth quarter, thanks in part to stronger sales of high-end processors for PCs and servers. The chipmaker reported a net profit of $1bn, or 16 cents per share, after charges for acquisitions. Before acquisition costs, net profit was $1.1bn. Intel's revenue for the quarter, which ended 28 December, was $7.2bn, up 10 per cent sequentially from the third quarter. Analysts had expected Intel to post a per-share profit of 14 cents on revenue of $6.9bn for the fourth quarter, according to a First Call poll. The chipmaker said its good fortune came from increased sales of PC processors, chipsets, motherboards and flash memory. Intel saw increases during the quarter both in the average selling price of its processors used in PCs and servers and in gross margin percentage. Gross margin came to 51.6 per cent, compared with 49 per cent in the third quarter. "The fourth quarter was a strong quarter for Intel, with growth in all the major areas of our businesses," Paul Otellini, Intel's president, said during a conference call to discuss the company's earnings report. The increase in average chip prices shows the company sold a higher percentage of mobile chips, higher clock speed Pentium 4 chips and Xeon chips for servers than it did of its Celeron chip for low-priced PCs. Meanwhile, Intel's flash memory business saw increased revenue and its largest unit shipments in eight quarters, Otellini said. (Flash memory is used widely in cellular phones and PDAs to store data.) Intel beat even its own highest expectations for the quarter. The company upped its revenue projection for the quarter slightly in December, citing somewhat stronger-than-expected sales. It boosted its prediction to between $6.8bn and $7bn in revenue from between $6.5bn and $6.9bn, its original projection made in October. For the year, Intel earned $3.1bn, or 46 cents per share, and had revenue of $26.8bn. Analysts expected Intel to hit 49 cents per share with revenue of $26.5bn, according to First Call. While Intel ended 2002 on a positive note, the company offered a cautious outlook for the beginning of 2003. The chipmaker predicted that its first-quarter revenue will fall to between $6.5bn and $6.7bn. It also predicts a decline in gross margin percentage to around 50 per cent. The company is being somewhat cautious because the PC market recovery expected to begin during 2003 has not yet shown signs it will materialise. "We've been positioning ourselves so that when the recovery comes we have the technology and the capacity in place," Andy Bryant, Intel's CFO, said during the conference call. "Everything's been happening the way it should. The question is when does the market return?"
John G. Spooner writes for News.com