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Intel blows past 4Q estimates

Intel Corp. (Nasdaq: INTC) rolled past analysts' estimates in its fourth quarter Thursday, raking in $2.4 billion, or 69 cents a share, on sales of $8.2 billion.

First Call consensus expected the chipmaker to earn 63 cents a share in the quarter.

After missing analysts' estimates in each of its past two quarters, Intel answered its critics with aplomb. Wall Street was expecting an upside surprise.

The $8.2 billion in sales represents an 8 percent improvement compared to the year-ago quarter when it earned $2 billion, or 59 cents a share, on sales of $7.6 billion. Sequentially, sales were up about 12 percent.

On a conference call with analysts, Intel officials said average selling prices of chips were up slightly from the third quarter. Paul Otellini, executive vice president, would not give specific guidance for selling prices for the next quarter, but did add the company would continue to ramp up high-margin products.

Otellini also said it would be able to meet demand this quarter.

Intel shares closed off 3/16 to 91 1/16 ahead of the earnings report before moving as high as 95 in after-hours trading.

Including a number of one-time charges, Intel earned 61 cents a share in the quarter.

Merrill Lynch analyst Joe Osha predicted Intel would earn 63 cents a share on sales of $8.2 billion.

For the year, Intel pocketed $8.1 billion, or $2.33 a share, on sales of $29.4 billion, up 12 percent from fiscal 1998 when it earned $6.1 billion, or $1.79 a share, on sales of $26.2 billion.

Company officials said strong demand led to record shipments of microprocessors, chipsets, motherboards and flash memory chips in the quarter.

"We are proud of our quarterly and annual records in both revenue and earnings," said CEO Craig Barrett in a prepared release. "Notably, these results were achieved as we extended our position as the key building block supplier to the worldwide Internet economy."

Looking ahead to the first quarter and fiscal 2000, Intel said it expects first-quarter sales to slip slightly from the fourth quarter due to seasonal factors.

It predicts that gross profit margins will be essentially flat with the fourth-quarter, right around 61 percent. Expenses should decline between 3 to 5 percent to $2 billion primarily due to lower advertising spending.

Capital spending for 2000 is expected to be approximately $5 billion, up from $3.4 billion in 1999. The higher anticipated capital spending is the result of expenditures related to the development of next generation 0.13-micron process technology for both 300 mm and 200 mm, in addition to increased spending on new fab construction and equipment purchases to add 0.18-micron capacity.

"In 2000, we look forward to continued growth in our core microprocessor business, and to the mid-year production of our new Itanium processor which began sampling in the fourth quarter of last year," Barrett said in the release. "This year we expect to grow revenues in our networking, communication and wireless businesses by 50 percent or more."

Last quarter, Intel missed analysts' estimates, earning $1.9 billion, or 55 cents a share, on sales of $7.3 billion.

Company officials blamed the shortfall mainly on shrinking profit margins.

Thirty-two of the 38 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.