Intel's First Quarter Revenue And Earnings Set Records; Q1 Revenue $6.4 billion, up 39%; Q1 Earnings Per Share $2.20, up 116%; $1.2 billion stock buyback in Q1

Business Wire, April 14, 1997

SANTA CLARA, Calif.--(BUSINESS WIRE)--April 14, 1997--Intel Corporation's first quarter revenue and earnings per share both set new records driven by higher demand for the company's most advanced processors, the Pentium(R) processor with MMX(TM) media enhancement technology and the Pentium(R) Pro processor, the company said today.

First quarter revenue was $6.4 billion, up 39 percent from $4.6 billion for the first quarter of 1996. Net income was almost $2.0 billion for the first quarter, up from $894 million for the comparable period a year ago. Earnings per share in the first quarter rose to $2.20 from $1.02 in the first quarter of 1996, an increase of 116 percent.

The quarterly results announced today compare with revenue of $6.4 billion, net income of $1.9 billion and earnings per share of $2.13 in the fourth quarter of 1996.

"1997 will be a year of major product transitions for Intel," said Dr. Andrew S. Grove, president and chief executive officer. "In the first quarter we successfully launched the Pentium processor with MMX technology. In May, we plan to introduce the Pentium II processor, the next major step in computing. As we shift to these more powerful processors, our challenge, as always, will be to add manufacturing capacity fast enough to supply all market segments."

In the first quarter, the company repurchased a total of 7.7 million shares of Common Stock at a cost of $1.2 billion under an ongoing program. Since the program began in 1990, the company has repurchased 92.6 million shares at a total cost of $4.6 billion. In March, Intel's Board of Directors approved an increase of up to 30 million shares in the company's Common Stock repurchase program. This increase brings the total authorization to 140 million shares.

During the quarter, the company announced its regular quarterly cash dividend of $0.05 per share. The dividend is payable on June 1, 1997 to stockholders of record on May 1, 1997. Upon payment of this dividend, Intel will have paid a dividend for nineteen consecutive quarters.

Intel's Board of Directors announced during the quarter that June 10, 1997 will be the record date for the previously announced two-for-one stock split. This split is subject to stockholder approval of an increase in authorized shares at Intel's annual meeting on May 21, 1997. The payment date for the split will be July 13, 1997. None of the share or per share amounts in this release have been adjusted to take into account the potential stock split.

BUSINESS OUTLOOK

The following statements are based on current expectations. These statements are forward looking and actual results may differ materially.

-- The company expects revenue for the second quarter of 1997 to be flat to slightly up from first quarter revenue of $6.4 billion.

-- Gross margin percentage in the second quarter of 1997 is expected to be flat to slightly down from 64 percent in the first quarter. Intel's gross margin expectation for 1997 is 60 percent plus or minus a few points. Based on Q1 results and current expectations, gross margin percentage for 1997 is expected to be at the mid to high part of that range. The company still believes that over the long-term the gross margin percentage will be 50 percent plus or minus a few points. Intel's gross margin percentage will vary depending on product mixes.

-- Expenses (R & D plus MG &A) in the second quarter of 1997 are expected to be approximately 7 to 9 percent higher than expenses of $1.3 billion in the first quarter, subject in part to revenue dependent expenses.

-- R & D spending for 1997 is expected to be approximately $2.4 billion.

-- The tax rate in 1997 is expected to remain at 35.5 percent.

-- The company expects interest and other income for the second quarter of 1997 to be approximately $170 million, assuming no significant changes in cash balances or interest rates and no unanticipated items.

-- Capital spending for 1997 is expected to be $4.5 billion. Depreciation is expected to be approximately $580 million for the second quarter of 1997 and $2.5 billion for 1997.

The above statements contained in this outlook are forward-looking statements that involve a number of risks and uncertainties. In addition to the factors discussed above, among the other factors that could cause actual results to differ materially are the following: business conditions and growth in the computing industry and in the general economy; changes in customer order patterns, including timing of delivery and changes in seasonal fluctuations in PC buying patterns; competitive factors, such as rival chip architectures, competing software-compatible microprocessors, acceptance of new products and response to price pressures; risk of inventory obsolescence due to shifts in market demand; variations in inventory valuation; timing of software industry product introductions; continued success in technological advances and their implementation, including the manufacturing ramp; timing of new strategic product and process development efforts; shortage of manufacturing capacity; risks associated with foreign operations; changes in the mixes of microprocessor types and speeds, motherboards, purchased components and other products; litigation involving intellectual property and consumer issues; level of stock repurchases; and other risk factors listed from time to time in the company's SEC reports, including but not limited to the MD&A (Management's Discussion & Analysis) discussion in the company's 1996 annual report incorporated by reference in the company's Form 10-K for the year ended December 28, 1996 (Part II, Item 7).