Intel's Earnings Miss Forecasts, to Lower Capital Spending

Intel Corp. (INTC), the world's largest chipmaker, on Tuesday reported third-quarter earnings that rose from a year ago, but missed analyst forecasts. The company's chief financial officer said it was still not seeing a long-awaited recovery in the information technology sector.

Santa Clara, California-based Intel said net income rose to $686 million, or 10 cents a share, from $106 million, or 2 cents a share, a year ago. Revenue fell slightly to $6.5 billio a share, within a range of 10 cents to 14 cents, on revenue of $6.52 billion, according to Thomson First Call.

Excluding one-time items, Intel said it earned 11 cents a share. Analysts expected Intel to report a fourth-quarter profit of 16 cents a share on revenue of $6.92 billion.

Capital spending for 2002 is expected to be about $4.7 billion, lower than the previous expectation of between $5.0 billion and $5.2 billion. Intel said the majority of the spending reduction came from cost-savings within existing plans. The company added it will reduce slightly their spending on chip equipment in fourth quarter by reusing some equipment.

"The economy is still not recovering in our industry," Andy Bryant, Intel's chief financial officer, told Reuters.

Bryant added that the company's third quarter came in at the lower end of seasonal norms and he sees much of the same for the fourth quarter, typically the strongest for the personal computer industry.

"We saw low-end seasonality in the third quarter and we're seeing low-end seasonality in the fourth quarter," Bryant said, following the release of the chipmaker's third quarter results.

Noting that the overall technology market remains soft, Bryant said, "As long we have a soft market, earnings are going to be lower than we would like."

Intel in early September published its mid-quarter update, tightening its revenue range for the third quarter to $6.3 billion to $6.7 billion from $6.3 billion to $6.9 billion, reassuring investors at the time that the beleaguered PC industry was not getting far worse.

Reuters contributed to this report.