Neowin.net

Chip giant Intel announced its fourth quarter and yearly results and said that while its sales had shifted upward by seven per cent compared to the last financial quarter,Q3, year on year and quarter on quarter, revenues dropped by 20 per cent.
As usual with press releases, the real story was tucked away near to the end, with Intel saying: "Average selling prices of microprocessors were down slightly from the third quarter primarily due to increased sales of Pentium III processors for the Microsoft* Xbox* design."

Just as well AMD didn't get the X-Box contract then. There a was time when it was nearly so.

Pentium IIIs were largely displaced by the Pentium 4 in the middle of 2001, as Intel reacted swiftly to AMD's incursion into its desktop territory is the way we'd put it. But then we're not Spinolas here...

Dr Craig Barrett, the company's CEO, said 2001 was a "terrible year" for the chip business. But he claimed that capital investments Intel had made will ensure the company will do well this year.

News source: The Inquirer - Intel blames X-Box for Pentium III erosion

Profits for the quarter were up 52 per cent from the quarter before but 62 per cent down year on year.

Revenues were down 61 per cent from the year before. The hard tack figures are $504 million net profit (income) for the quarter, a drop of 77 per cent from the same quarter last year.

Turnover (revenue) for the quarter was $7 billion, a 20 per cent drop from the same period last year.

If you look at the yearly figures, the company turned over $26.5 billion, a 21 per cent drop compared to 2000, while profit dropped by 70 per cent from $12.1 billion in 2000 to $3.6 billion.

This has to be down to average selling prices - which forced Intel to slash the price of the Pentium 4 in August, and to phase out the Pentium III sooner than anyone expected.

That drop in billions of silver dollars, is quite a fall.

However, in the jargon of Wall St analysts, Intel met expectations. That means in plain English that it never said it was going to do stunningly well. And it never said it was going to stunningly well for the three quarters before either.

It therefore didn't heighten expectations, and therefore expectations were met.

Intel is being cautious about the current quarter although its gross margin for 2002 will still be over 50 per cent, which must cheese off companies like Microsoft which has to survive on far more slender margins.

Turnover for the first quarter will amount to something similar to the usually ebullient Q4, at between $6.4 billion and $7 billion (US billions).

It will spend around $2 billion in the first quarter of this year on capital investments - around the same amount as the fourth quarter.

R&D spending in 2002 will amount to $4 billion or so, slightly up from 2001, the firm said.

Capital spending will be around $5.5 billion, down from $7.3 billion in 2001, a fact which Pat Gelsinger signalled to the Wall St Journal Asia some months back, but subsequently denied by Intel.

CPU sales were up in the fourth quarter, said Intel, beating all previous records, and chipset sales rose too, as well as mobo sales.

The mycelium (net communications) side of the Intel biz rose sequentially, while wireless comms rose too.

Maybe Intel did have to sell Pentium IIIs cheaper because of the introduction of the Microsoft X-Box, as it said. But the 733 Pentium IIIs used in the X-Box must have been amortised from the year before, and we'd say that the huge cut it made in Pentium IIIs and Pentium 4s last summer was prompted by other pressures than the X-Box.

Still, all credit to Intel. It spent a lot of money last year on cap investment, and we're pretty sure its .13 micron technology is now working and its move to the process is proceeding according to plans.

Hey, moles even tell us it's going to deck OpenVMS when it moves wholesale to 12-inch wafer fabs. It's currently experimenting with the new software and already has 12-inch technology up and running. But that's a different story, of course.