Intel revises expectations

7 Mar 2003

Chip manufacturer Intel has said that it is scaling back its revenue expectations for the first quarter ending 29 March.

The company, which employs 3,150 people at its plant in Leilxip, said it had narrowed its expected revenue range to US$6.6bn, down from the previous forecast of US$6.5bn to US$7bn. A year before Intel recorded first quarter revenue of US$6.8bn.

On the upside the company said that its net loss is expected to be US$100m compared to the previous expectation of a net loss of US$125m, “primarily due to lower expected impairment charges on private equity investments.”

Chief financial officer Andy Bryant said that the full-year outlook remains the same, saying he had not seen any signs that corporate spending on IT had returned.

The company said that it expects the gross margin percentage to be slightly lower than the midpoint of the range of 50pc plus or minus a couple of points, because of a higher than expected flash inventory reserves (flash chips are used in mobile phones).

The company has been attempting to diversify from its core business of PC chips, sales of which have been languishing, into the mobile communications sector. However, there appears to be no real pay off from the venture as yet, despite being a key growth market. Currently that end of the business accounts for about 20pc of its overall business. In its revised forecast Intel said that PC chip sales were doing better than expected but that its telecommunications chip business was “trending below expectation due to lower-than-anticipated flash memory sales.”

Intel said revenue would be down 2.7pc compared to the same period last year. Earlier the company had said it hoped for a rise in revenues.

Following news of today’s revised results shares dropped around 5pc to US$15.96 from a close of US$16.7.

Last month Intel reported better than expected fourth quarter results, with revenue at US$7.2bn, up 10pc sequentially from the third quarter and 3pc year on year.

At the time had grown its business for flash memory.

The company is currently spending US$2bn building its most advanced manufacturing plant at Leixlip where production of 300mm wafer is due to begin in 2004.

By Suzanne Byrne