Intel to speed up shift to Pentium 4

Intel Corp. today reported a 94 percent year-to-year drop in second-quarter net income and said it's planning "a major acceleration" of the ongoing transition from the Pentium III processor to the newer Pentium 4 chip.

Craig Barrett, Intel's president and chief executive officer (CEO), said in a statement that the Pentium 4 is now scheduled to be available at "all mainstream PC price points by the end of the year." The speedier transition is being made possible by better-than-expected manufacturing performance with the Pentium 4 and a production start that was ahead of schedule on the new Intel 845 chip set, he added.

The Pentium 4 was initially released last fall and became available in a 1.7-GHZ version in April. Intel said today that it has been able to get higher yields, faster frequencies and lower unit costs on the chip than originally projected.

The semiconductor maker said its microprocessor shipments as a whole were above expectations in the second quarter, rising sequentially compared with first-quarter levels. But business was weak on an overall basis, with total revenue coming in at US$6.3 billion - down 24 percent from the same period a year ago and off 5 percent from the first quarter.

Profits totalled $854 million excluding some acquisition-related costs, a drop-off of 76 percent from $3.5 billion in last year's second quarter. With the acquisition expenses taken into account, Intel said, net income fell from $3.1 billion a year ago to just $196 million in the just-finished quarter.

The second-quarter showing "met our overall expectations" as shipments of the company's flash memory and communications devices fell off from their first-quarter levels and offset the sequential increase in the microprocessor business, Barrett said. The company forecast that third-quarter revenue will come in between $6.2 billion and $6.8 billion.

Meanwhile, Apple Computer Inc. today reported a net profit of $61 million on $1.475 billion in revenue for its fiscal third quarter ended June 30. Apple said it shipped 827,000 computers in what is traditionally its slowest quarter, but the revenue figure was down almost 20 percent from the same period last year. In the year-earlier quarter, Apple reported earnings of $200 million and did $1.8 billion worth of business.

Matt Berger of the IDG News Service contributed to this report.

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Craig Stedman

Computerworld

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