Intel quarterly profits slashed

Officials for the company said that first quarter income, excluding acquisition-related costs, was $US1.1 billion. Earnings fell from $US0.43 per share to $US0.16 per share, a decrease of 63 per cent from the first quarter of 2000. Revenue fell 16 per cent to $US6.7 billion.

The results beat by one penny a consensus estimate of analysts polled by First Call/Thomson Financial.

Intel's guidance to its investors for the second quarter of this year is to expect revenue to come in between $US6.2 and $US6.8 billion, Intel spokesman Howard High said.

Craig Barrett, Intel's president and CEO, said Intel's chip business "appears to have stabilised, and we expect to see normal seasonal patterns going forward from our current business level."

Barrett's outlook for Intel's communications businesses was less rosy. "In our communications businesses, we are expecting continued softness," Barrett said in a statement.

High said the weakness in Intel's communications businesses could be traced to "inventory issues and volume issues" with communication infrastructure companies such as Cisco, Nortel Networks, and Lucent .

Despite its lowered earnings report, Intel continues to invest heavily in next-generation processor technology, according to a report by Cahners In-Stat Group, an industry think tank. Intel's capital expenses were $6.7 billion in 2000, and will grow to $US7.5 billion this year, according to the report.

In the short term, the chip maker plans to aggressively market its Pentium 4 processor by discounting prices down to what the company calls "mainstream" price points. For Intel, a mainstream price point for a Pentium 4 chip is a price low enough to allow PC makers to build a $US1,200-$US1,500 PC around it, according to officials.

"We want to prepare so that when the recovery comes, we want to jump on it from day one, so that with every opportunity we can seize it," said High.

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