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Intel: Options would drag down earnings

The chipmaker backs its second-quarter revenue expectations and says expensing stock options would have cut first-quarter earnings by one-third.

Chipmaker Intel on Wednesday backed its second-quarter revenue outlook and said expensing stock options would have cut first-quarter earnings by one-third.

An uncertain global economy makes it difficult to predict demand, Intel said in a filing with the Securities and Exchange Commission. It forecast second-quarter revenue of $6.4 billion to $7 billion, the same outlook it gave April 15, when it reported first-quarter results.

The Santa Clara, Calif., company said it expects to spend between $3.5 billion and $3.9 billion on equipment and other technology used in manufacturing chips, unchanged from previous expectations.

Intel said it sees amortization costs related to acquisitions at $80 million in the second quarter and $300 million for 2003.

The company said it will update investors again on its business June 5.

Intel, a vocal opponent of accounting regulators' efforts to mandate the expensing of stock options, said that move would have cost it $298 million, or 5 cents per share, in the first quarter, based on the Black-Scholes option pricing model.

That would have cut quarterly net income to $617 million, or 9 cents per share--33 percent less than the $915 million, or 14 cents per share, that the company reported.

In the year-earlier quarter, expensing stock options would have cost Intel $287 million, or 4 cents per share, reducing net income by 31 percent.

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