Intel Reluctant to Say Worst Is Now Over
Key technology companies including chip maker Intel Corp. and online auctioneer EBay Inc. turned in mixed year-end results Tuesday, but many surpassed grim Wall Street forecasts.
Even so, investors punished the stocks in after-hours trading.
With the sole exception of EBay, tech firms reporting quarterly results announced dramatically lower sales and net income than a year earlier.
But after two years of decline, some analysts were saying the worst may be over.
“We’re at the bottom,” said Eric Ross, an analyst at Thomas Weisel Partners. “Things aren’t going to get any worse, but we are going to take a while to get out of here.”
Intel said its fourth-quarter net income tumbled 77% to $504million, or 7 cents a share. The world’s largest chip maker posted a net income of $2.19billion, or 32 cents, in the same period a year ago. Sales fell 20%, to $6.98billion from $8.7billion as demand for personal computers fell.
Excluding acquisition charges, the company earned $998million, or 15 cents, topping analysts’ projections of 11 cents a share. A late burst of holiday buying boosted demand for Intel’s Pentium 4 chip.
For all of 2001, Intel earned $1.3billion, down 88% from $10.4billion in 2000. Revenue was $26.5billion, down 21% from the $33.7billion in 2000.
However, Intel shares fell on modest projections for first-quarter revenue and the company’s reluctance to predict a rebound. Intel expects revenue to be between $6.4billion and $7billion in the first quarter of 2002.
“Economic indicators remain weak,” Chief Financial Officer Andy Bryant said during a conference call for investors. While the company is ready for a recovery, “we cannot predict when that will happen.”
Adding to the sense of caution, Intel said it would cut capital spending from a record $7.3 billion in 2001 to $5.5 billion this year. It said most of that drop was enabled by a new wafer size that makes manufacturing more efficient.
The cutbacks dragged down shares of semiconductor equipment makers such as Applied Materials in after-hours trading. Intel slipped to $33.76 in after-hours trading after ending the regular session at $34.68, down 16 cents.
Even firms posting growing sales and profits, though, could not please investors with high hopes.
EBay beat analysts’ estimates as fourth-quarter earnings grew 8.7%, to $25.9million, or 9 cents a share, on sales of $219.4million.
Shares rose 87 cents to close at $64.03 in regular trading, but plunged $3.38, or 5.3%, in after-hours trading.
“Expectations were very high for this company ... not for the quarter, but for the outlook,” said Shawn Milne, an analyst from SoundView Technologies Group.
EBay said it expects earnings, excluding one-time charges of 32 cents or 33 cents a share in the first half of 2002, with revenue between $490million and $510million.
For all of 2001, EBay earned $90.4 million, or 32 cents a share, on revenue of $748.8 million. Those figures all rose from 2000, when EBay made $48.3 million, or 17 cents a share, on revenue of $431.4 million.
The number of people who used the site during the fourth quarter increased 88% from the period a year ago, EBay reported, bringing the number of registered users to 42.4 million. EBay has not lost money since the company went public in 1998 and has surpassed Wall Street estimates for nine consecutive quarters.
In other tech earnings:
* Handspring Inc. reported a second-quarter loss of $19.8 million, or 16 cents a share, on sales of $70.5 million, down 39% from $115.6 million a year ago. The company reported a loss of $15.2 million, or 15 cents a share, a year earlier.
The No. 2 hand-held computer maker attributed the widening loss to brisk sales of its lower-priced--and less profitable--devices.
Before releasing its earnings, Handspring announced that MMO2, the fifth-largest European mobile phone company, will distribute its hand-held computers in Britain, Germany, the Netherlands and Ireland. But the company also announced delays in its Treo communicator, a widely anticipated combination of organizer and mobile phone.
Handspring shares closed up 8 cents at $7.78 on Nasdaq. In after-hours trading, it slid 83 cents, or more than 10%, to $6.95.
* Check Point Software Technologies Ltd. said profit fell to $77million, or 30 cents a share, down from $81million in the same period a year ago on revenue of $122.5million, down from $140.4million a year ago. Shares for the Israeli Internet security company dropped $5.74 to $38.68 after the company warned of more sales weakness in the near term.
* Hughes Electronics Corp., posted a fourth-quarter loss of $136.2 million. During the same time a year ago, the owner of DirecTV had net income of $1.06 billion, which included a one-time gain of $1.13 billion. Sales increased 11% to $2.28 billion for the company, which is being acquired by rival EchoStar Communications Corp.
Hughes and rivals have been hurt by slowing subscriber growth and increased costs to carry TV networks such as Walt Disney Co.’s ESPN. Hughes’ TV programming and other costs rose 16% to $898.8million. EchoStar executives have said the planned $35-billion purchase of Hughes will help the combined company negotiate better programming contracts.
* Juniper Networks Inc. reported a fourth-quarter loss of $5.13million, or 2 cents a share, compared to net income of $62.2million, or 18 cents a share, a year earlier. Revenue for the company, which manufactures equipment to direct Internet traffic, fell 49% to $151million from $295.4million. After taking a third of the market with its faster Internet router, Juniper’s sales and earnings declined last year as customers cut spending and rival Cisco, the No. 1 networking-equipment maker, increased the speed of its router. Juniper shares fell 14 cent to $17.96 before the results were announced.
* DoubleClick Inc. said it had a fourth-quarter loss of $64 million, up from a loss of $104.8 million in the previous quarter. Sales for the largest Internet advertising company fell to $96.1 million from $132.3 million a year ago. The company, which attributed the decline in sales to the failure of many Internet companies, eliminated 479 jobs and lowered operating costs by 18% in the fourth quarter.
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Bloomberg News, Associated Press and Reuters were used in compiling this report. Times staff writer Joseph Menn also contributed to this report.
