Intel first quarter revenue $8.1 billion

Intel Corporation recently announced first quarter revenue of $8.1 billion, down 7 percent sequentially and up 20 percent year-over-year.

First quarter net income was $1.7 billion, down 20 percent sequentially and up 89 percent year-over-year. Earnings per share were 26 cents, down 21 percent sequentially and up 86 percent from 14 cents in the first quarter of 2003.

"Intel`s first quarter results showed healthy growth in both revenue and earnings compared to a year ago, led by improvement in worldwide IT spending," said Craig R. Barrett, Intel chief executive officer. "We ramped our 90 nm process into high volume with the launch of several new desktop processors, and plan to substantially increase shipments in the second quarter including our first mobile and server products. The combination of these products plus new processors and platform innovations coming over the course of this year positions us well for continued growth."

On March 30, Intel and Intergraph Corporation announced a settlement agreement that resolves all of the remaining issues in a patent infringement case and provides certain rights for Intel customers. Under the agreement, Intel will pay $225 million to Intergraph. Intel recorded a $162-million charge to first quarter cost of sales, which reduced earnings per share by approximately 1.7 cents. The remaining $63 million represents the value of intellectual property assets, which will be amortized over approximately five years.

* The gross margin percentage for the first quarter was 60.2 percent, including the settlement agreement-related charge which impacted the gross margin percentage by two points. The gross margin percentage was lower than 63.6 percent in the fourth quarter primarily due to the impact of the settlement agreement along with lower revenue.

* Flash memory units were higher. Flash revenue information is available in the supplemental financial information table that accompanies this release.

* Connectivity product units were lower.

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For the desktop, Intel introduced the first microprocessors manufactured on the company`s 90 nm, 300 mm process technology. Formerly code-named Prescott, the new Pentium 4 processors are available in a variety of speeds and include a 1 MB second-level (L2) cache memory along with new performance-enhancing software instructions. Most of these processors also include Intel`s Hyper-Threading (HT) Technology. The company also introduced the 3.4 GHz Pentium 4 processor Extreme Edition, which provides 2.5 MB of cache memory for today`s most demanding PC applications, along with a 3.4 GHz version of the company`s Pentium 4 processor with HT technology, both manufactured on 130 nm technology.

In mobile, Intel has begun shipping the company`s first 90 nm microprocessor for mobile PCs, code-named Dothan, with an industry launch scheduled for May. The company increased the performance of its low-voltage and ultra-low-voltage Pentium M processors for thin-and-light notebook PCs. The company also increased the speed of the Celeron M processor to 1.4 GHz and boosted the speed of the ultra-low-voltage version of the processor to 900 MHz.

Intel announced that beginning in the second quarter it will introduce a new naming convention for its desktop and mobile microprocessors. The processor brand name will be accompanied by a processor number that represents the technical features of the product, including design architecture, clock frequency, cache size, bus speed and other technologies.

For the enterprise, the company introduced the Intel XeonT processor MP running at 3 GHz and featuring 4 MB of L3 cache memory. Intel also introduced 2.2 GHz and 2.7 GHz MP versions of the product with 2 MB of cache, along with a 3.2 GHz Intel Xeon processor with 2 MB of cache for 1- and 2-way servers. The company introduced the Intel Server Compute Blade SBX44 for 4-way blade servers along with the Intel E7210 chipset, which brings new reliability features to Pentium 4 processor-based servers. Intel broadened the Itanium 2 processor family by introducing 1.4 GHz and 1.6 GHz processors designed to enable affordable dual-processor systems. Customers adopting the Itanium 2 processor during the quarter included Audi, Bank Lippo of Indonesia, Chengdu Railway Bureau and Samsung Electronics.

For the digital home, Intel unveiled platform designs for a new category of entertainment PCs expected to be available from OEM suppliers beginning in 2004. Intel and Movielink announced plans to accelerate the deployment of online premium movie content to home computers and mobile PCs. Intel and Dolby Laboratories announced plans to bring consumer electronics-quality audio to PCs based on Intel High Definition Audio.

In flash memory, Intel announced the industry`s first NOR memory based on 90 nm process technology. The company`s 90 nm flash technology enables die size reductions of approximately 50 percent, and flash products based on this technology are expected to be in volume production in the second half of the year.

In wireless networking, Intel introduced the Intel PRO/Wireless 2200BG network connection, which brings higher bandwidth 802.11g wireless networking to notebooks based on Intel CentrinoT mobile technology. The company also announced it is working with leading wireless equipment makers Siemens and Alcatel, along with service providers to develop and deploy wireless wide area networking solutions based on Intel`s silicon for the 802.16 specification, also known as WiMAX. The company also formed the Korea Research and Development Center which focuses on advanced wireless communications technology, high-quality media coding, and next generation platforms for content distribution and consumption.

For mobile phones and PDAs, the company introduced the Intel PXA27x family of application processors, formerly code-named "Bulverde." The processors integrate Intel Wireless MMXT technology for advanced 3-D gaming and video, along with the Wireless Intel SpeedStep Power Manager technology. The company discussed its next-generation baseband processor family, code-named Hermon, which includes a dual-mode processor for the UMTS and wide-band CDMA "3G" networks. Intel and Sony Music Entertainment introduced an application for Intel-based phones and PDAs that allows users to access short music videos and other entertainment content.

In storage area networking, Intel introduced two optical transceivers that support the high-performance 4-Gbps Fibre Channel specification, along with transceivers for entry-level 1- and 2-Gbps Fibre Channel and Ethernet storage systems.

In optical networking, Intel announced a telecommunications-grade optical transceiver based on the company`s affordable tunable laser technology that can bring high-capacity optical networking to a range of new applications.

During the quarter, Intel began shipping 90 nm microprocessors manufactured at the company`s 300 mm Fab 11X facility in New Mexico. The company also plans to begin 300 mm production at its new Fab 24 facility in Ireland during the second quarter. Intel began construction of a new chipset assembly and test facility in Chengdu, China along with an upgrade to the company`s facility in San Jose, Costa Rica.

Later in the year, Intel will begin to offer select microprocessors and chipsets using new technology that reduces the lead content in these products by approximately 95 percent and will continue working with the industry to develop future lead-free technology. In addition, agreements aimed at accelerating the development of Extreme Ultraviolet (EUV) Lithography were announced by Intel and Cymer for the development of EUV light sources, and by Intel and Media Lario International for the development of EUV optical components.