Intel to Trim 4,000 Jobs

With revenue down 7 percent and income down 52 percent sequentially from first quarter 2002, Intel said Tuesday
that it would trim its headcount by 4,000 workers in the second half of 2002.

The company said the workforce reductions will be exclusive of acquisitions, and will primarily be achieved through attrition,
voluntary separation programs and some targeted business disinvestments.

The planned cuts are not unexpected. Salomon Smith Barney analyst Jonathan Joseph published a research note Monday indicating Intel
CEO Craig Barrett planned a speech to employees Tuesday afternoon, at about the same time the company goes over its second quarter
financials with analysts. The note prompted rampant speculation that substantial belt-tightening would follow. The Wall Street
consulted former and current Intel employees which estimated that as many as 10,000 jobs may have been on the line.

That suspicion was further reinforced by a speech Barrett gave employees about 10 months ago, shortly after Sept. 11, when he noted
that the company had about 20,000 more employees than it had three years previously, but the revenue the company generated was about
the same. As of the end of the first quarter, Intel had 83,000 employees, down from 86,000 employees at the end of 2000.

The company reported Tuesday that its Q2 revenue amounted to $6.3 billion, down 7 percent sequentially, and about flat year-over
year. Additionally, the company said its Q2 net income was $446 million, down 52 percent sequentially and up 128 percent
year-over-year. Earnings came in at 7 cents per share, down 50 percent sequentially and up 133 percent over the 3 cents per share it
recorded in Q2 2001.

“In a tough environment, we continued to execute well,” Barrett said. “Our investments in technology and manufacturing are
delivering processors with clear performance leadership, resulting in market segment share gains across the board. We also saw
growth in our communications businesses, led by solid flash memory revenue and share growth.”

The company’s best performers, in terms of product shipments, where Flash memory units and Ethernet connectivity products, both of
which grew during the quarter. Intel saw flat growth in motherboard unit shipments, while Intel Architecture microprocessor unit
shipments and chipset unit shipments were lower.

Still, Barrett said he expects modest improvement in the second half of the year.

“Although an overall industry recovery has been slow to materialize, we still expect a modest seasonal increase in demand in the
second half,” he said.

The company is expecting flat to slightly increased revenues in Q3, coming in between $6.3 billion and $6.9 billion.

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