Intel Reports Record Quarterly Revenue, Net Income and EPS; Twelfth Consecutive Year of Revenue Growth

Business Wire, Jan 12, 1999

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 12, 1999--

Intel Investor Relations Web site: www.intc.com

Q4 earnings announcement call live on Web site at 2:30 p.m. PDT

Replay available shortly after conclusion of conference call

Intel Corporation set new quarterly records for revenue, net income, earnings per share and microprocessor unit shipments, the company said today.

Seasonally strong demand for Intel's P6 micro architecture products in the second half lifted the company's total 1998 revenue to a new annual record.

Revenue totaled $26.3 billion in 1998, up 5 percent from the prior record of $25.1 billion in 1997. Net income was $6.1 billion, down 13 percent from $6.9 billion in 1997. Earnings per share of $3.45 declined 11 percent from $3.87 per share in 1997.

Record fourth quarter revenue of $7.6 billion was up 17 percent from fourth quarter 1997 revenue of $6.5 billion. Fourth quarter revenue was up 13 percent from third quarter 1998 revenue of $6.7 billion.

Record fourth quarter net income of $2.1 billion was up 18 percent from fourth quarter 1997 net income of $1.7 billion. Net income in the fourth quarter was up 32 percent from third quarter 1998 net income of $1.6 billion.

Record fourth quarter earnings per share of $1.19 increased 21 percent from $0.98 in the fourth quarter of 1997 and rose 34 percent from $0.89 in the third quarter of 1998.

"Intel achieved its 12th consecutive year of revenue growth in spite of the challenges of a turbulent market in 1998," said Dr. Craig R. Barrett, president and chief executive officer. "During the fourth quarter we achieved record revenue in the Americas, Europe and Asia-Pacific."

"Intel enters 1999 with a first quarter roadmap offering new products in every segment of the computer market. This quarter we will launch Pentium(R) III and Pentium III Xeon(TM) processors, the first products in the next generation of Intel Architecture microprocessors. On the manufacturing front we will soon begin the transition to 0.18 micron, the next generation of process technology."

"The investments of the last year in new product development and productivity improvement have strengthened the company and positioned it well for a market that will continue to be competitive and dynamic," Barrett said.

During the quarter, the company paid its regular quarterly cash dividend of $0.04 per share. The dividend was paid on Dec. 1, 1998, to stockholders of record on Nov. 7, 1998. This is an increase from the previous $0.03 per share quarterly dividend. Intel has paid a regular quarterly cash dividend for six years, and the dividend has been increased in each of the past five years.

In the fourth quarter, the company repurchased a total of 16.5 million shares of common stock at a cost of $1.5 billion. For the full year, the company repurchased 80.9 million shares at a cost of $6.7 billion. Since the program began in 1990, the company has repurchased 294.3 million shares at a total cost of $13.6 billion.

BUSINESS OUTLOOK

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not reflect the potential impact of any mergers or acquisitions that may be completed after the date of this release. -0-

--   The company expects revenue for the first quarter of 1999 to be
     down from fourth quarter revenue of $7.6 billion due to seasonal
     factors.

--   Gross margin percentage in the first quarter of 1999 is expected
     to be down slightly from 58 percent in the fourth quarter.
     Intel's gross margin expectation for 1999 is 57 percent, plus or
     minus a few points, compared to 54 percent for all of 1998. In
     the short term, Intel's gross margin percentage varies primarily
     with revenue levels and product mix.

--   Expenses (R&D plus MG&A) in the first quarter of 1999 are
     expected to be approximately 2 to 4 percent lower than fourth
     quarter expenses of $1.6 billion. Expenses are dependent in part
     on the level of revenue.

--   R&D spending is expected to be approximately $3.0 billion for
     1999, up from $2.7 billion in 1998.

--   The company expects interest and other income for the first
     quarter of 1999 to be approximately $200 million, assuming no
     significant changes in expected interest rates or cash balances,
     and no unanticipated items.

--   The tax rate for 1999 is expected to be 33.5 percent.

--   Capital spending for 1999 is expected to be approximately $3.0
     billion, down from $4.0 billion in 1998, which included
     approximately $475 million of capital assets acquired from
     Digital Equipment Corporation. The lower capital spending for
     1999 is primarily a result of reduced investment for new
     facilities and improved utilization of manufacturing equipment.

--   Depreciation and amortization is expected to be approximately
     $3.4 billion for 1999, up from $2.8 billion in 1998. Depreciation
     and amortization for the first quarter of 1999 is expected to be
     approximately $820 million.