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Intel’s Profit Meets Forecasts, Presents Rosier Near-Term Outlook

April 15, 1996

NEW YORK (AP) _ Saying personal computer demand appears solid, Intel Corp. on Monday reported a very slight increase in first-quarter profit and 31 percent jump in revenue.

The company presented a moderately upbeat outlook for the second quarter.

Intel earned $894 million, or $1.02 per share, in the quarter that ended March 30. It earned $889 million, or $1.02 per share, in the same period a year ago.

Revenue was $4.64 billion, up from $3.56 billion a year ago.

The performance slightly exceeded expectations of Wall Street analysts, who had forecast a profit of 99 cents per share. Intel reported its results after the stock market closed. Its shares rose 93 3/4 cents to $60.56 1/4 on the Nasdaq Stock Market.

Although orders for its computer chips fell below sales during the period, Intel said it still expects revenue in the second quarter to be roughly equal to the first. It said more PC makers are asking for chips to be delivered immediately rather than placing orders several weeks in advance.

Intel also forecast a higher profit rate because sales of lower-margin items are declining. Its gross margin in the latest period was 48 percent, down from 55 percent a year ago. The company expects the margin to rise above 50 percent in the second quarter.

Such statements may help the PC industry regain some of the luster it has lost since December. Sales growth is believed to have slipped below 10 percent in the January-March period, a greater drop than is typical in the seasonal industry. Several PC makers will report quarterly results later this week.

As the maker of the microprocessors that run most PCs, Intel’s results are closely watched as an indication for the overall industry.

``Our total microprocessor shipments set a new record in the first quarter,″ Intel chief executive Andrew Grove said in a statement. ``From our perspective, PC demand appears to be solid.″

Intel said demand for its Pentium chips continued to tilt toward faster performing chips. Sales of 486 chips, the generation before Pentium, fell dramatically from the last three months of 1995 and will not be publicly reported in the future.

The company warned that, with PC makers relying more heavily on orders that must be delivered immediately, it is more difficult to gauge demand.

However, its expectation for a higher gross margin stems from fewer sales of so-called ``motherboards,″ the circuit board that holds all the main chips of a PC. Intel said it should be able to offset the lost motherboard revenue with more sales of chips, which have a higher profit margin.

Some financial analysts said they might have to raise their earnings forecasts because of that change.

``I’m looking for nice growth in profitability in the June quarter,″ said Drew Peck, analyst at Cowen & Co. in Boston.

``Intel seems to be managing in this rather moribund environment,″ he said.

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