Intel has squeaked past lowered fourth-quarter earnings expectations, amid signs of a serious slowdown in PC sales growth.
The company's outlook for the first quarter of 2001 doesn't hold much hope for a speedy recovery. Intel forecast a 15 percent decrease in revenue for the first quarter of 2001.
The decrease in revenue will partly come from a seasonal slowdown; the first quarter is usually a slow time of year for Intel and the PC business as a whole. But Intel said it also expects to feel the effect of a slowing worldwide economy.
This was a year of record annual revenue and earnings; yet slowing economic conditions impacted fourth-quarter growth and are causing near-term uncertainty," CEO Craig Barrett said in a statement.
"Looking forward, we are confident in our business strategy and competitive position."
Fourth-quarter revenue was US$8.7 billion, up 6 percent from the same quarter last year and about the same as the last quarter.
Annual figures for 2000 came in at revenue of US$33.7 billion, up 15 percent from 1999, and net income of US$12.1 billion, up 49 percent.
Intel also pocketed US$799 million from investments and interest in the fourth quarter, the company said. The gain was higher than the company's revised expectations, which called for a gain of US$675 million.
Intel attributed the US$117 million gain from transferring its Interactive Media Services division to Convera, a new publicly traded company formed with Excalibur.
Critics of Intel have called the chipmaker's portfolio a "crutch" used to hit Wall Street estimates, as the US$180 million target assumes no net gains from the sale of equity investments, the company said.
Indeed, Intel's massive investment portfolio has taken a hit amid the stock market correction, with its value decreasing from US$5.85 billion in September to US$3.74 billion in December.
Despite its gloomy first-quarter forecast, Intel said it expects to see a seasonal increase in the second half of the year, depending on the direction of the overall economy.
Despite the dour first-half economic outlook, Intel will increase research and development spending to US$4.3 billion in 2001 from US$3.9 billion in 2000, according to its earnings statement. Capital spending for 2001 will increase to about US$7.5 billion in 2001 from US$6.7 billion in 2000.
Speeding toward Pentium 4
The company is shooting for the fastest introduction yet for its Pentium 4. Looking ahead to the second half of the year, the company is working to launch its new 0.13-micron manufacturing process and beginning preparations for a move to larger 300-millimeter wafers, which will decrease manufacturing costs by creating more chips per wafer.
Intel had stated earlier that Pentium 4 shipments would surpass Pentium III early in 2002. Otellini said Intel's goal is now to reach that point this year.
