Despite continued weakness in the PC industry, Intel exceeded its own expectations for the fourth quarter, posting US$7.2 billion in revenue, a 3 percent increase from last year's fourth quarter figure of $6.9 billion, the company announced Tuesday.
Intel increased its own expectations for fourth-quarter revenue in December, citing an uptick in sales of its processors and increased demand for flash memory. The company said it expected to bring in between US$6.8 billion and US$7 billion in the fourth quarter.
Fourth quarter earnings per share were US$0.16, exceeding estimates of US$0.14 per share from financial analysts polled by Thomson Financial/First Call. The chipmaker took in US$1 billion in net income for the fourth quarter, up 108 percent from the fourth quarter of last year when the company made US$504 million, it said in a statement.
The same group of analysts polled by Thomson Financial had expected the chipmaker to post $6.9 billion in revenue.
The company's Intel Architecture business, including its desktop, notebook, and server processors, continued to provide the vast majority of Intel's revenue and all of its profitability. Fourth-quarter revenue for the group was US$5.9 billion, up from US$5.8 billion in the fourth quarter of 2001, and operating income was US$2 billion, up from US$1.8 billion in the year-ago quarter.
"Our Intel Architecture business had a solid quarter, setting an all-time record in microprocessor units," said Paul Otellini, Intel's president and chief operating officer, during a conference call to discuss the results.
Other businesses at the company continued to post losses. The Wireless Communications and Computing Group, which makes Intel's XScale processors for PDAs (personal digital assistants) and flash memory chips for cell phones, reported an operating loss of US$98 million for the quarter on revenue of US$662 million. The operating loss widened from US$20 million in the fourth quarter a year ago, even though revenue increased from US$518 million over the same period.
The Intel Communications Group, which makes chips for networking applications, continued to struggle, posting an operating loss of US$168 million on revenue of US$544 million. The operating loss was wider and the revenue lower than in the fourth quarter of 2001.
Revenue from the Asia-Pacific region (excluding Japan) made up 38 percent of Intel's total revenue, larger than any other segment and up 3 percent from the fourth quarter of last year, Otellini said. The percentage of revenue from the Americas fell 3 percent year-over-year to 30 percent, while Europe's contribution held steady at 25 percent, the company said.
For the entire 2002 fiscal year, Intel made US$3.1 billion in net income on revenue of US$26.8 billion. Net income for 2002 increased 141 percent from 2001 net income of US$1.3 billion, while revenue increased only marginally from the 2001 figure of US$26.5 billion.
First-quarter 2003 revenue will be between US$6.5 billion and US$7.0 billion, in keeping with seasonal trends, said Andy Bryant, Intel's chief financial officer, on the conference call.
Intel will spend about US$4 billion on research and development in 2003, about the same as in 2002, it said in its statement. It will spend most of that money on process technology advancements and future chip designs, Bryant said.
However, capital expenditures will fall sharply to between US$3.5 billion and US$3.9 billion this year, compared to spending of US$4.7 billion in 2002, Intel said in the release. Capital spending in the year ahead will focus on bringing all of Intel's fabs worldwide up to 300-millimeter wafer production, which provides manufacturing cost-savings in the long run, the company said.
Intel is on track to release its new Centrino chips for notebooks in March, Otellini said. Centrino will contain a mobile processor and wireless LAN chip based on the 802.11b standard. The company will also introduce its hyperthreading technology on a wider variety of microprocessors and launch the next version of its Itanium 2 server chip, codenamed Madison, in the first half of the year, Otellini said.
The road to 90-nanometer process technology will soon come to an end for Intel, as the company has completed the designs for Prescott and Dothan, the code names for its next-generation desktop and mobile processors, Otellini said. Those processors will be the first to be manufactured on the 90nm process, he said.
Ahead of the announcement, Intel's stock (INTC) closed the day at US$17.79, up 2.36 percent from its opening price. Earlier Tuesday, Intel unveiled six new processors and a new chipset for notebooks.