Trading in Intel Corp shares was heavy yesterday morning in the wake of its monstrously good fourth quarter earnings, but the share price was little changed as concerns arose over projected flat first quarter revenues, so the shares swung between positive and negative territory after opening up $1.875 at $149 dropped to close at $142.25. The company expects first quarter 1997 revenue to be only about flat with the $6.4bn of the quarter just ended, but way up from 1996’s first quarter sales of $4.64bn. It also said it expects gross margin percentage in the current quarter to be flat to down from the 63% of last quarter, and that gross margin for all of 1997 will be at a figure to die for of 60% plus or minus a few points. Over the longer term, it sees it averaging out at 50% plus or minus a few points over the long-term. First quarter expenses are expected to be about 4% to 5% percent higher than fourth quarter expenses of $1.2bn. Capital spending for 1997 is expected to be a hefty $4.5bn, up from $3bn in 1996. Record unit shipments for Pentium and Pentium Pro processors lifted 1996 revenue and earnings per share 29% and 44% respectively, from 1995. Intel hit on all cylinders in 1996, the 25th anniversary of the introduction of the microprocessor, said Andrew Grove, president and chief executive. Definitely by the end of next year, Intel will be the most profitable company in the world, predicts Rajiv Chaudhri, chip analyst at Goldman, Sachs & Co. Its market capitalization should exceed GE’s this year. Its net cash position increased a phenomenal $2.1bn to $8.2bn in the fourth quarter alone – a monumental jump from the $3.4bn of cash reported a year earlier. In other news, the board approved a two- for-one split after the May annual meeting. If only IBM Corp had hung on to its 22%, it could have retired by now.
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