INTC....
Financial Review
-- The average selling price (ASP) of Intel Architecture
microprocessors used in PCs and servers was higher. The ASP including
microprocessors used in embedded applications and the Microsoft* XBox
was approximately flat.
-- The gross margin percentage was 51.6 percent, higher than the
company's updated expectation. The gross margin percentage was higher
than 49 percent in the third quarter of 2002, primarily due to higher
revenue.
-- Amortization of acquisition-related intangibles and costs for
the fourth quarter included a $15 million write-off of acquired
intangibles related to the previous acquisition of Xircom Inc.
-- The tax rate was approximately 27.4 percent in the fourth
quarter excluding the impact of acquisition-related costs and
excluding the $75 million tax benefit related to divestitures of prior
acquisitions.
-- Gains or losses on equity investments and interest and other
resulted in a net loss of $117 million, greater than the previous
expectation of a net loss of $90 million. The net loss on equity
investments was $171 million, including the impact of impairment
charges of approximately $177 million.
Product Shipment Trends (Sequential)
-- Intel Architecture microprocessor unit shipments set a record.
-- Chipset unit shipments were higher.
-- Motherboard unit shipments set a record.
-- Flash memory unit shipments were higher.
-- Ethernet connectivity product unit shipments were higher.
Intel Architecture Business
Intel increased its desktop performance leadership with the introduction of the Intel(R) Pentium(R) 4 processor at 3.06 GHz with Hyper-Threading (HT) Technology. HT Technology allows a variety of multithreaded operating systems and application software to run as though the PC has two processors, boosting performance by as much as 25 percent. The company also extended its leadership in the value segment during the quarter with the introduction of Intel(R) Celeron(R) processors at 2.2 GHz and 2.1 GHz.
In mobile, Intel began revenue shipments of its next-generation mobile processor, previously known as Banias. The company announced the Intel(R) Centrino(TM) brand name, which signifies the company's best technology for notebook computers. Intel Centrino mobile technology is comprised of the next-generation processor along with integrated wireless networking capability, chipsets and features that enable extended battery life, thinner and lighter notebook designs, and outstanding mobile performance. The Intel Centrino mobile technology components are being designed, optimized and validated by Intel to maximize the wireless mobile computing user experience, and are scheduled to be introduced in March.
For the enterprise, Intel introduced 20 Intel(R) Xeon(TM) family-related products, including seven processors at speeds up to 2.8 GHz along with new chipsets, server boards, server chassis and RAID controllers. Software momentum for the Intel(R) Itanium(R) 2 processor continued to build as Oracle and SAS delivered production versions of their enterprise applications. The Itanium 2 processor set additional performance records, achieving the world's highest 4-way results in database, SAP application, and secure Web server benchmarks(2). According to the latest TOP500 supercomputer ranking, 56 of the world's most powerful supercomputing environments are based on Intel processors, as compared to only three systems in the 1999 ranking(3).
Intel Communications Group
Intel announced plans to invest $150 million in companies pursuing WiFi technology in order to help accelerate the worldwide deployment of high-speed wireless networks. The Intel Communications Fund invested in Cometa Networks, a wholesale nationwide wireless Internet access company; STSN, a high-speed wired and wireless Internet access provider for hotels and conference centers; and TeleSym, an IP telephony software company.
In network processing, the company introduced the Intel(R) IXP2850 network processor, which combines high-performance packet processing and robust security features in a single chip. Intel also introduced a new software toolkit based on standards developed by the Network Processing Forum.
In optical networking, the company launched five components for developing 10-Gigabit per second (Gbps) Ethernet and FibreChannel optical transceivers. In networked storage, Intel introduced products that lower the cost of solutions for accessing, managing and protecting data. The company also broadened its support for embedded product developers with an Intel(R) XScale(TM) technology-based processor for temperature-sensitive applications in the telematics, automotive, industrial and telecommunications market segments.
Wireless Communications and Computing Group
In flash, Intel introduced the world's first flash memories that combine multi-level cell technology for greater storage capacity along with 1.8V-only operation for simpler cell phone design. Based on the company's 0.13-micron technology, the new products are available in 64, 128 and 256 Mbit densities, and consume nearly 40 percent less battery power than other low-power flash memory.
For application processing, the company introduced Intel XScale technology-based processors available in a new, stacked-chip package that integrates the processor and flash memory in a single, space-saving package. The company also announced it is producing customer samples of a product code-named Manitoba that integrates computing, communications and memory functions on a single chip. Manitoba is designed to power next-generation cell phones for use on GSM/GPRS wireless networks.
Customer adoption of Intel XScale technology-based processors continued to grow, leading to record unit shipments. Dell Computer introduced a new line of personal digital assistants based on the Intel processors. In addition, eight leading manufacturers of wireless Smart Displays announced new products that function both as flat panel monitors and as portable, wireless appliances for accessing the Internet and other PC-based applications and content.
Technology and Manufacturing Group
Intel opened Fab 11X, the company's second 300-mm manufacturing facility. Fab 11X expands the company's Rio Rancho, N.M. facility with approximately 200,000 square feet of new clean room space, and is scheduled to transition from 0.13-micron production to 90-nanometer production later in the year.
EARNINGS WEBCAST
Intel will hold a public webcast at 2:30 p.m. PST today on the Web site at www.intc.com. A replay of the webcast will be available until Jan. 21 on the Web site and by phone at (719) 457-0820, pass code 735793.
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.
Intel, Pentium, Celeron, Centrino, Itanium, Xeon and XScale are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries.
*Other names and brands may be claimed as the property of others.
(1) Acquisition-related costs consist of one-time write-offs of purchased in-process R&D and amortization of acquisition-related intangibles and costs, which includes write-offs of acquisition-related intangibles. Earnings excluding acquisition-related costs in 2002 also exclude the $75 million tax benefit related to divestitures of prior acquisitions recognized in the fourth quarter of 2002. Intel's definition of earnings excluding acquisition-related costs is not necessarily comparable with how other companies might present this information. Earnings excluding acquisition-related costs are not in accordance with GAAP because GAAP earnings include these costs.
(2) Sources: Transaction Processing Performance Council, SAP, Standard Performance Evaluation Corporation.
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01-14-03 1616ET
