Intel More Confident of Meeting Targets

SCOTTSDALE, Ariz. – Intel Corp., the world's largest chipmaker, is confident it will meet fourth quarter revenue forecasts of between $6.2 billion and $6.8 billion, but is less certain when the current economic downturn will end, Chief Financial Officer Andy Bryant said on Tuesday.

Speaking to Reuters on the sidelines of a technology conference hosted by Credit Suisse First Boston Technology here, Bryant said management was "getting more and more comfortable every day" with its projections of fourth quarter revenues of between $6.2 billion and $6.8 billion in the current quarter that ends in December.

Wall Street analysts on average forecast revenues for the No. 1 semiconductor maker of $6.56 billion, near the midpoint of its forecast range.

Intel stock rose 44 cents to $32.31 after earlier falling as low as $30.90 on Nasdaq. So far this year, Intel has risen 6 percent, compared with a 7.7 percent decline in the Philadelphia Semiconductor Index.

The move in Intel stock helped push the Nasdaq into positive territory in afternoon trading, but the tech-laden index ended down 5.26 points, or 0.27 percent, to 1,935.97.

Bryant said the Sept. 11 attacks and the subsequent business downturn had made forecasting more difficult.

In addition, after having to make several warnings over the past year that results would fall short of official forecasts, Bryant said Intel now felt safer offering broad ranges rather than more specific numbers in its financial guidance.

"What you have to understand is that when you give narrow range (forecasts), you open yourself up to a lot of time in court," he said.

As for the current recession, which has hurt virtually all technology companies, Bryant said he was confident it would be followed by a period of sustained growth -- eventually. He said the timing of that remained unclear though.

"We have come to the conclusion that we're no better than anyone else when it comes to doing that kind of forecast," he said. "Figuring out the near term picture is pretty tough."

Intel, along with the rest of semiconductor industry, has suffered a bruising year of falling sales and profits as the $200 billion industry has been mired in its worst-ever downturn brought on by slowing economies and weak demand.

The company has a 78 percent share of the market for microprocessors, the primary computing engines of personal computers, and about 80 percent of its revenues come from the sale of microprocessors, chipsets and motherboards.

Global chip sales are forecasted to tumble 31 percent this year from some $200 billion in 2000, but rebound slightly in 2002, notching a modest gain of 6 percent, then gaining steadily in the following two years.

Operating in the current climate, Intel has become increasingly focused on getting returns from all the investments it makes rather than indiscriminately spending on nifty new technologies, Bryant said.

As opposed to many prior presentations that have focused on growth opportunities and the future outlook, Bryant's remarks on Tuesday were centered on the way Intel was managing its business in the uncertain business climate.

"The world has changed on spending on e-business for e-business' sake, to focusing on the bottom line," he said of some of the newer Internet technologies Intel had deployed in-house. He said the company was less likely to invest in any new technology unless it would bring down labor requirements and add savings to the bottom line.

Bryant declined to discuss Intel's plans for capital spending next year, but said internal spending on information technology would be about flat with last year.

He said, however, that more of those IT dollars next year would go to personal computer upgrades, as opposed to networking, which had an emphasis over the past year.

"The mix will change dramatically. We cut back on desktop improvements last year. We really slammed the door on PC spending," Bryant said. "The place where we will under-invest (next year) is the basic network."

He stressed that even during the most difficult periods, investing in Intel's own technology was critical, since it was technology that ran the business.

To illustrate this, Bryant said that on an average day Intel employees sent 3 million e-mails, while its security team cleansed its network of about 5,000 computer viruses.