Despite charge, Intel beats expectations

The chipmaker Wednesday reported a profit of $2.2 billion, or 33 cents per share, for the quarter. Revenue for the period, which ended on Dec. 27, was $8.74 billion, slightly higher than a previous record of $8.73 billion set during the third quarter of 2000.

For all of 2003, Intel reported revenue of $30.1 billion, up 13 percent from $26.8 billion in 2002. Earnings per share were 85 cents, up 85 percent from 46 cents in 2002.

On average, 34 analysts surveyed by Thomson First Call expected the company to show a quarterly per share profit of 25 cents on revenue of $8.65 billion. Intel had forecast revenue of between $8.5 billion and $8.7 billion for the quarter. Typically, analysts use the midpoint of the company's quarterly revenue guidance to formulate their estimates.

Included in Intel's fourth-quarter earnings was a $611 million, or 9 cents per share, charge for the impairment of goodwill from acquisitions and a $620 million, or 9 cents per share, tax benefit from divestitures.

During the same period one year ago, Intel reported a profit of $1 billion, or 16 cents per share, on revenue of $7.16 billion.

The fourth-quarter performance was fueled by the chipmaker's Intel Architecture Group, which produces PC processors and related products. The group saw record shipments and higher average prices, partly a result of increased sales of server chips.

"We ended the year on a high note as ongoing strength in emerging markets coupled with improving demand in established markets drove revenue to record levels," Intel CEO Craig Barrett said in a statement.

Looking ahead, the company expects to earn between $7.9 and $8.5 billion in the first quarter of 2004. Intel will spend between $3.6 billion and $4 billion on capital improvements, such as buying new manufacturing equipment. It spent $3.7 billion in 2003.

Intel also said it will spend $4.8 billion on research and development, compared with $4.4 billion in 2003, as it engineers another new chip manufacturing process.