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July 16, 1997updated 05 Sep 2016 1:02pm

INTEL: STEADY AS SHE GOES – LONGER TERM MARGINS WILL DECLINE

By CBR Staff Writer

Intel Corp continued the charge of technology stocks Tuesday which was lead by impressive results from Texas Instruments Inc, reporting second quarter net income up 58% at $1.6bn, compared with $1bn last time, on revenue up 29% at $6bn over $4.6bn last time. However revenue, earnings and unit shipments were down sequentially on the seasonally strong first quarter. Intel blamed weakness in Europe, inventory correction following the strong first quarter and introduction of its Pentium MMX technology and product transitions in the PC industry. It expects its third quarter sales to be flat or slightly up on the $6bn second quarter – it did $6.4bn sales in the first quarter – while gross margins may decline slightly and expenses will rise a few points above the $1.3bn recorded in the second quarter. It expects 1997 gross margin to be 60% for the year, but worryingly says long- term margins will only be 50% give or take a few points. R&D spending in the year is expected to total $2.4bn. 44% of revenue came from American sales, compared with 40% last time; 24% from Europe compared with 30%, 19% from Asia/Pacific compared with 18% and 13% from Japan compared with 12%. Earnings per share were $0.92, just above analysts’ forecasts, taking account of its July 13 two-for-one stock split.

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