By Tim Palmer
How excellent a thing it is to have a monopoly! Nevertheless, it tends to make your shareholders greedy and despite first quarter figures to die for, Intel Corp’s shares went into reverse ahead of the opening of Wall Street trading yesterday because of a few weasel words in the statement and conference call. The company warned that revenues for the second quarter may be flat with or only slightly higher than those for the first quarter, which doesn’t really seem so bad, but the shares traded as low as $129.875 before the opening, down from Monday’s close of $133.75. Intel also delivered a bit of a surprise by saying its next regularly scheduled price reductions, due at the end of April, would be about the same as price cuts made in February, where there had been expectations that they would be much deeper – securities analysts at the time said the February price cuts were less than had been expected, interpreting that as a sign of solid demand for Intel chips. February price cuts ranged from no change to cuts of up to 34%. A more profitable mix of products improved wellnamed gross margins during the quarter to 64% from 63% in the final quarter of 1996, but the company warns that its margins will be flat or slightly lower in the current quarter, and at about 60% for the year, eventually tailing off towards 50%. Intel also says it plans to boost marketing expenses by 7% to 9% this quarter, which could leave a very small dent in the profits it would otherwise have reported. Intel said its revenue in the first quarter rose in all geographic regions except the Americas. Asia-Pacific revenue, which accounts for about 20% of Intel’s total, almost doubled. The idea that Advanced Micro Devices Inc and Cyrix Corp pose any real threat to Intel is ludicrous: all the spare capacity in the world capable of turning out Pentiums and Pentium Pros couldn’t produce more than a fraction the number Intel routinely makes.
