Intel Updates Third-Quarter Business Expectations; Revenue Expected to be Between $8.3 Billion and $8.6 Billion
SANTA CLARA, Calif., Sep 2, 2004 (BUSINESS WIRE) -- Intel Corporation expects
revenue for the third quarter to be between $8.3 billion and $8.6 billion, as
compared to the previous range of $8.6 billion to $9.2 billion.
Worldwide demand for Intel Architecture products is trending below previous
expectations driven by lower than expected end demand along with customer
reductions in component inventory levels. Communications revenue is weaker than
anticipated primarily due to lower than expected growth in flash memory
shipments.
The third-quarter gross margin percentage is now expected to be approximately 58
percent, plus or minus a couple of points, as compared to the previous
expectation of 60 percent, plus or minus a couple of points. The gross margin
percentage for 2004 is now expected to be between 58 percent and 60 percent, as
compared to the previous range of 60 percent, plus or minus a couple of points.
Spending for the third quarter is now expected to be approximately $2.4 billion,
below the previous expectation of approximately $2.5 billion. The tax rate for
the third quarter is now expected to be approximately 29.5 percent, below the
previous expectation of approximately 31 percent, reflecting the expectation
that a higher percentage of profits will be generated in lower-tax
jurisdictions. The tax rate for the fourth quarter is expected to be 30.5
percent, below the previous expectation of approximately 31 percent. All other
expectations are unchanged.
This Business Update is a scheduled update to the company's Business Outlook for
the quarter, which ends Sept. 25. Intel's third-quarter Business Outlook was
originally published in the company's second-quarter 2004 earnings release,
available at www.intc.com. The company will discuss this update during a public
webcast at 2:30 p.m. PDT today at www.intc.com, with a replay available until
Oct. 12.
Intel, the world's largest chip maker, is also a leading manufacturer of
computer, networking and communications products. Additional information about
Intel is available at www.intel.com/pressroom.
This Business Update and the July 13 Business Outlook are forward looking and
involve a number of risks and uncertainties. This Business Update does not
include the potential impact of any mergers, acquisitions, divestitures or other
business combinations that may be completed after Sept. 1, 2004. The following
are what we presently consider to be the important factors that could cause
actual results to differ materially from our published expectations.
Demand for Intel's products, which impacts revenue, the gross margin percentage
and expenses, is affected by business and economic conditions as well as
computing and communications industry trends and changes in customer order
patterns. Revenue and the gross margin percentage are affected by competing chip
architectures and manufacturing technologies, competing software-compatible
microprocessors, pricing pressures and other competitive factors, as well as
market acceptance of Intel's new products, the availability of sufficient
inventory to meet demand, the availability of externally purchased components or
materials and the development and timing of introduction of compelling software
applications and operating systems that take advantage of the features of
Intel's products. Future revenue is also dependent on continuing technological
advancement, including developing and implementing new processes and strategic
products, as well as the timing of new product introductions, sustaining and
growing new businesses and integrating and operating any acquired businesses.
The gross margin percentage varies with revenue levels, product mix and pricing,
changes in unit costs, capacity utilization and the existence of excess
capacity, and the timing and execution of the manufacturing ramp, including the
ramp of 90 nm process technology on 300 mm wafers, and associated costs. The
gross margin percentage could also be affected by excess or obsolete inventory,
variations in inventory valuation and impairment of manufacturing or assembly
and test assets. Expenses, particularly certain marketing and compensation
expenses, vary depending on the level of revenue and profits.
The tax rate expectation is based on current tax law and current expected
income, and assumes Intel continues to receive tax benefits for export sales.
The tax rate may be affected by the closing of acquisitions or divestitures, the
jurisdiction in which profits are determined to be earned and taxed, the
resolution of issues arising from tax audits with various tax authorities and
the ability to realize deferred tax assets.
The expectation regarding gains or losses from equity securities and interest
and other assumes no unanticipated events and varies depending on equity market
levels and volatility, gains or losses realized on the sale or exchange of
securities, impairment charges related to non-marketable and other investments,
interest rates, cash balances, and changes in fair value of derivative
instruments. Expectations of impairment charges on investments are based on
experience, and it is not possible to know which specific investments are likely
to be impaired or the extent or timing of individual impairments.
If terrorist activity, armed conflict, civil or military unrest or political
instability occurs in the United States, Israel or other locations where Intel
conducts its business, such events may disrupt manufacturing, assembly and test,
logistics, security and communications, and could also result in reduced demand
for Intel's products. The impacts of major health concerns or of large-scale
outages or interruptions of service from utility or other infrastructure
providers, on Intel, its suppliers, customers or other third parties could also
adversely affect Intel's business and impact customer order patterns. Results
could also be affected by adverse effects associated with product defects and
errata (deviations from published specifications) and by litigation or
regulatory matters involving intellectual property, stockholder, consumer,
antitrust and other issues, such as the litigation and/or regulatory matters
described in Intel's SEC reports, as well as other risk factors listed in
Intel's SEC reports, including the report on Form 10-Q for the quarter ended
June 26, 2004.
*Intel is a trademark or registered trademark of Intel Corporation or its
subsidiaries in the United States and other countries.
SOURCE: Intel Corporation
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