Intel Looks To Future with Springdale, Prescott

Apr 16, 2003

Michael Singer

Intel is trying to make lemonade out of its lemon first quarter.

The chipmaking giant Tuesday posted lower first-quarter earnings but predicted its second quarter would be better based on new products coming out in the next three months.

The Santa Clara, Calif.-based company said its net income for the quarter was $915 million, or 14 cents per share, compared with $936 million, or 15 cents per share, last year at this time. The company reported $6.75 billion in revenue compared with $6.78 billion a year earlier. The news came as little surprise to investors as Intel previously said it would not make its full range of numbers based on weak demand for its flash memory chips. Analysts, on average, had expected Intel to post earnings per share of 12 cents with forecasts ranging between 11 cents and 13 cents.

Intel had two major announcements in the quarter including its Intel Centrino mobile technology and its wireless-Internet-on-a-chip technology, code-named Manitoba, for cell phones.

Intel CEO Craig Barrett said both of the products were well received in the marketplace.

"These types of leadership products, along with the scheduled ramp of our 90-nm process technology in the second half of the year, help to position us well for future growth," Barrett said.

As to that future, Intel said its will launch a chipset code-named Springdale later in the second quarter incorporating its Intel 875P chipset along with integrated graphics. The 875P has dual channel DDR400 memory support, a fast 800 MHz system bus, AGP8X and internal support for Serial ATA/RAID. Intel said the chipset will also have a new architecture designed to increase Gigabit Ethernet networking performance and Intel Stable Driver Technology. The company said Springdale is designed to work with its next-generation processor for performance desktop PCs, code-named Prescott.

Based on 90-nm technology, Prescott will include enhancements to Intel's Hyper-Threading Technology and the Intel NetBurst microarchitecture. In addition, the chips will include an 800 MHz front side bus and a 1 MB L2 cache. Intel said chip would also incorporate 13 additional instructions, which are undetermined at this time.

Because of the new technology, Intel said its revenue in the second quarter is expected to be between $6.4 billion and $7.0 billion. However, the company said it may have to spend a little more than expected due to higher expected startup costs in the second quarter and discounting the flash memory that it did not sell in the last three months.

Intel said its gross margin percentage in the second quarter should hit approximately 50 percent, plus or minus a couple of points, as compared to 52 percent in the first quarter.

The No. 1 chipmaker said its R&D spending for 2003 is expected to be approximately $4.0 billion. Capital spending for 2003 is expected to be between $3.5 billion and $3.9 billion.


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