Good News, Bad News For Intel In 4QGood News, Bad News For Intel In 4Q

Chipmaker Intel had good news and bad news for investors in its fourth-quarter results released Tuesday. The company beat analysts' forecasts, showing strong growth since the third quarter, but still posted earnings only a fraction of what they were last year.

For the fourth quarter of 2001, ending Dec. 29, the company reported a net income, including costs related to acquisitions, of $504 million, a jump of 375% from the $106 million reported for the third quarter. However, net income was down 77% from the fourth quarter in 2000. Excluding acquisition costs, net income was $998 million, up 52% from the $655 million reported in the third quarter, but down 62% from the fourth quarter in 2000. Revenue was $6.98 billion, up 7% from the third quarter, but down 20% from last year.

In a conference call with analysts, Intel CFO Andy Bryant credited the upswing to stronger than expected PC demand over the holiday season, and said the company set a quarterly record for microprocessor unit shipments.

"This is better than I was expecting, especially at the margin level," says Technology Business Research analyst Brooks Gray. Gross margin percentage was 51.3%, up from 46% in the third quarter. "There was a definite concern that the aggressive pricing of the P4 processor was going to lead to lower margins. The fact that they improved in this economic environment speaks highly of Intel." Gray says there will probably be even more price erosion in 2002, leading to lower PC prices.

For the year, Intel reported revenue of $26.5 billion, a drop of 21% from the $33.7 billion reported for 2000. Net income for 2001 was down about 88% from the year before, dropping to $1.3 billion, or 19 cents a share, compared with $10.5 billion, or $1.51 per share. Excluding acquisition costs, earnings were $3.6 billion, down 70% from the $12.1 billion in 2000.