October 16, 2001 Intel Profits Tumble 77 Percent By REUTERS Filed at 4:47 p.m. ET
SANTA CLARA (Reuters) - Intel Corp. (news/quote) on Tuesday reported third-quarter profit that tumbled 77 percent as it suffered from slowing economies and weak personal computer sales, and forecast somewhat sluggish sales for the traditionally strong fourth quarter.
Intel (INTC.O) said that net income before acquisition-related costs fell to $655 million, or 10 cents a share, from $2.89 billion, or 43 cents, a year ago, before 7 cents a share in acquisition-related costs. Sales declined 25 percent to $6.5 billion from $8.73 billion.
On that basis, the Santa Clara, California-based company had been forecast to report a per-share profit of 10 cents a share, within a range of 8 cents to 11 cents, according to the 24 analysts surveyed by research firm Thomson Financial/First Call. Sales were forecast on average at $6.38 billion.
Intel, which has been buffeted this year from weak demand and competitive pressure from rival Advanced Micro Devices Inc. (news/quote) (AMD.N), also said that it expects fourth-quarter sales of $6.2 billion to $6.8 billion, the same range it has given for the past two quarters.
Intel shares rose 58 cents to close at $24.96 on Nasdaq on Tuesday. The stock has declined 20 percent this year, while the stock price of main rival Advanced Micro Devices has tumbled 23 percent amid the worst-ever slump in the semiconductor industry.
Intel Chief Executive Craig Barrett said in a statement that the company expects to see ``moderate unit growth in microprocessors and flash memory in the fourth quarter.'' But any increase in the number of chips it sells could well be offset by falling prices, he noted.
Intel has slashed prices on its Pentium 4 chips by as much as 80 percent in some cases, partly in a bid to regain market share from Advanced Micro Devices and partly in the hope that it would spur demand.
Intel said that it expects its gross margin percentage, or the percentage of revenue left after subtracting product costs, to be 47 percent in the fourth quarter, ``plus or minus a couple of points,'' versus 46 percent in the third quarter.
Its spending on research and development will be about $3.9 billion, $100 million less than its previous expectations, due to cuts in discretionary spending in ongoing programs, Intel said.