Intel Corp reports that revenue from Pentium sales surpassed that from the 80486 family for the first time in the quarter just ended, fuelling profits to a 44% rise at $889m, or $2.04 a share, on turnover up 34% to $3,560m; the earnings were well ahead of Wall Street consensus estimates of about $1.67 a share. Intel says its business model supports gross margin levels in the low 50% range – a figure IBM Corp once took for granted but can now only dream about – but that would be down from 57.7% this time last year. In the most recent quarter, gross margins were 54.8%. Intel also said it is on target to meet its internal goal for Pentium shipments this year. The company says that during the current quarter, it will announce a proliferation of the Pentium family designed specifically for notebook computers, and asserts that desktop and bigger computers based on the P6 will be available in the second half of this year – and that start-up costs for the P6 will not be as severe as with the Pentium. Over the past five years Intel has invested $12,000m to put in place a strategy that has enabled us to tap into the enormous growth of the worldwide information technology industry. In the first quarter, it was evident the elements of that strategy are meshing well, said Dr Andrew Grove, president and chief executive.To deliver the benefits of high-performance computing and to assure that we are competitive with any alternative products, we have accelerated creation of new processors by running parallel development programmes, he noted. We have invested over $7,000m in the past five years to expand and update our factories, giving us the ability to deliver advanced processors in high volume. Currently, Intel is the only company producing microprocessors in volume with 0.35-micron process technology. This year we will be investing over $3,000m to support customer needs. During the quarter, board shipments set a new Intel record, and it expects quarterly unit volume of boards to continu e to increase this quarter. The geographic split of business shows the Americas accounting for 50%, Europe for 31% and Asia-Pacific for 12%, with Japan at 7%. Orders for the first quarter were greater than shipments and set another record, and all geographic regions experienced growth in orders and shipments compared with the fourth quarter. Substantially all Pentium processors shipped by Intel in the first quarter were of the version without the flaw.
