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Intel Ends 2002 on Strong Momentum

Intel Corp. eked out marginally higher sales and profits thanks largely to record volumes from its Architecture business, which includes the Pentium 4 Hyper-Threading processor and the newly rebranded Centrino, which has begun revenue shipments.

The Santa Clara, Calif.-based company said profits from operations (excluding acquisition-related costs) rose 7 percent to 16 cents a share, beating analysts forecasts of 14 cents. Net income was up 6 percent ot $106 million. Fourth-quarter revenue rose 3 percent to $7.2 billion.

"2002 ended with a strong quarter," Intel Chief Executive Craig R. Barrett said in prepared remarks.

In the conference call, Andy Bryant, chief financial officer, explained that the Architecture group represented the largest mix of the total revenue: $5.9 billion, up 2 percent. The wireless communications group, which is mainly the flash memory business, showed the sharpest growth with a 28-percent year-over-year increase but only totaled $662 million of the revenue mix. The networking group showed the greatest weakness.

"The fourth quarter was a strong quarter for Intel...for 2002 in total, we executed well against our plan," said President and Chief Operating Officer Paul Otellini.

For the first quarter of 2003, though, Intel isn't ready to admit that its growth engines have revved up. Revenue in the first quarter is expected to be between $6.5 billion and $7 billion, essentially flat compared with the $6.78 billion the company reported for the same, year-ago quarter.

R&D spending for 2003, excluding in-process R&D, is expected to be approximately $4 billion, flat with 2002. And capital spending for 2003 is expected to be between $3.5 billion and $3.9 billion, down from the $4.7 billion in 2002. Intel's semiconductor equipment spending is being primarily targeted at 300-mm wafer production, which is providing the company with greater capital efficiency and lower manufacturing costs.

For 2002, revenue was $26.8 billion, up 1 percent from $26.5 billion in 2001. Net income from operations for 2002 (excluding acquisition-related costs) was $3.5 billion, down 4 percent from $3.6 billion in 2001. Earnings excluding acquisition-related costs were 51 cents per share, down 2 percent from 52 cents in 2001.