If Options Counted, Intel's Cost $298 Mln
Reuters, Wednesday May 7, 2:10 pm ET
SAN FRANCISCO (Reuters) - Intel Corp.'s (NasdaqNM:INTC - News) first-quarter net income would have been reduced by one-third if it had accounted for stock options as an expense, the world's largest computer-chipmaker said on Wednesday in a filing with securities regulators.
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Intel, the top maker of microprocessors that are the brains of personal computers, also backed its previously given forecast for second-quarter revenue, according to its quarterly filing with the U.S. Securities and Exchange Commission (News - Websites).
An uncertain global economy has made it hard to forecast demand with great accuracy, Intel noted. Intel forecast second-quarter revenue of $6.4 billion to $7 billion, the same outlook that it issued on April 15, when it reported first-quarter results.
Intel, a vocal opponent of accounting regulators' efforts to mandate the expensing of stock options, said such a requirement would have cost it $298 million or 5 cents per share, in the first quarter, based on the Black-Scholes option pricing model, the most often-used method to value options.
That would have cut quarterly net income to $617 million, or 9 cents per share -- 33 percent less than the $915 million, or 14 cents per share, that the company reported under generally accepted accounting principles.
In the year-earlier quarter, expensing stock options would have cost Intel $287 million, or 4 cents per share, reducing net income by 31 percent.
Intel's Chief Executive Officer Craig Barrett penned a recent op-ed article in the Wall Street Journal in which he argued that top executives might not be able to certify companies' results because the value ascribed to the stock options may be inaccurate.
Others, however, have pointed out in response that all accounting involves assumptions and estimates, such as with goodwill, and other items on companies' statements.
The Santa Clara, California, company said it expects capital spending in 2003 of $3.5 billion and $3.9 billion unchanged from previous expectations.
Intel said it expects amortization costs related to acquisitions at $80 million in the second quarter and $300 million for 2003.
The company, whose shares fell 23 cents to $19.31 on Nasdaq in midafternoon trading, said it would update investors again on its business on June 5 after U.S. markets close. (Additional reporting by Caroline Humer in New York)
