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January 19, 1994


By CBR Staff Writer

The fourth quarter figures from Santa Clara, California-based Intel Corp duly came in rather subdued compared with the preceding quarters, and at $1.35 were four cents shy of the street consensus forecast of $1.39 (CI No 2,335). The company blamed heavier-than-expected start-up costs for its new chip factories in California and in Ireland. Even the $594m or $1.35 a share in the fourth quarter was flattered by a gain of $27m in non-recurring interest and other income. Intel also notes that now that it is in volume production of its 80486DX2 and Pentium processors, the prices are coming down.In 1994 we plan to do more of the same, said Andy Grove, Intel’s president and chief executive: Our goal is to double the performance of the processors used at key price points. The company says that unit shipments of the 80486 family continued at high levels during the fourth quarter and that demand is continuing to shift to higher performance versions, such as the DX2 parts. The company reckons it is on track to ship several million Pentium processors this year, having shipped several hundred thousand in 1993. The company also highlights Flash memory revenues, which increased in the quarter as shipments accelerated its plant in New Mexico and from its two manufacturing partners in Japan. Embedded controller chips and other semiconductor products also did well, the company says, noting that the 80960 was the top selling RISC by number in 1993 – according to In-Stat Inc. The geographic mix shifted slightly in 1993, driven – perhaps a little surprisingly – by stronger European revenue growth. Growth in the US and Japan was roughly in line with corporate growth rate as a whole, while growth in the Asia-Pacific region was slower. Revenues for the full year in the Americas grew at 50%, Europe at 28%, Japan grew just 8% and Asia-Pacific grew at 14%. The drain on profits was that heavy investment in new plant and equipment, which meant that cost of sales for the fourth quarter grew by $102m compared with the previous quarter. There were also higher proportions of Flash memory and system-level products in the product mix during the quarter, leading to slightly lower gross margins. Research and development expenditure rose about 7% and marketing, general and administrative costs climbed 14% – that was all those Intel Inside ads we’ve been seeing in print and on television.The company grew its payroll 14% to 29,500 in 1993.

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