Intel's 4Q06 revenues reach (US)$9.7 billion 16 January, 2007 By Liam Lahey

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The Santa Clara, Calif.-based chipmaker attributed the results to a number of factors including a gain from the sale of certain assets of the company's communications and application processor business to Marvell Technology Group.

"Intel's product and technology leadership yielded a strong fourth quarter with higher selling prices and record unit shipments in the fastest growing segments of the market," said Intel president and CEO Paul Otellini said in a statement.

For 2006, Intel achieved revenues of $35.4 billion, operating income of $5.7 billion, net income of $5 billion and EPS of 86 cents. Intel paid record cash dividends of $2.3 billion and used $4.6 billion to repurchase 226.6 million shares of common stock.

Intel's 4Q06 gross margin was 49.6 per cent, as compared to 49.1 per cent in 3Q06. Gross margin included the positive impact of higher microprocessor units and selling prices that were partially offset by higher factory underutilization charges along with flash memory write-downs and NAND start-up costs, officials said. The company used $150 million for share repurchases and announced the approval of a 12.5 per cent increase in the quarterly cash dividend to 11.25 cents per share beginning with the dividend expected to be declared in the first quarter of 2007.

Last September, Intel announced job cuts and targets resulting from a structure and efficiency analysis. The company ended 2006 with a workforce of 94,100 people, lower than 102,500 in 2Q06 and slightly below the target of 95,000 people. The company is on track to generate spending and manufacturing cost savings of approximately $2 billion in 2007 exclusive of restructuring costs.

Intel also said its total microprocessor unit sales set a company record. The ASP was higher, driven primarily by a mix shift to leading edge processors in all segments along with growth in mobile as a percentage of the PC microprocessor mix. Chipset units were flat. Motherboard units were lower. Flash memory units also set a record. Revenue was higher in all regions and greater than the seasonal average in the Asia-Pacific and Americas regions.

Meanwhile, Intel completed the development of its next-generation 45nm process technology, scheduled for production in the second half of 2007, ramping to three 300mm factories in 2008.

Intel also produced samples of Penryn, the company's first 45nm processor, and booted the Windows Vista, Mac OS X, Windows XP and Linux operating systems using first silicon.

In 4Q06, Intel said it set new records for total microprocessor unit sales as well as server, mobile and flash unit sales. Server and mobile microprocessor revenue also exceeded previous records.

The company shipped more than 70 million 65nm microprocessors during 2006 and ramped dual-core technology to greater than 50 percent of 4Q shipments.

Intel launched the quad-core microprocessors for volume servers and PCs, further extending the performance records established by the Intel Core micro-architecture. The company is now shipping nine different quad-core processors for servers, workstations and PCs, including a new Intel Core 2 Quad processor for mainstream PCs.

For the first quarter of 2007, Intel said it expects revenues to be between $8.7 billion and $9.3 billion, gross margin is predicted to be 49 per cent, plus or minus a couple of points.

Spending (R&D plus MG&A) would be between $2.6 billion and $2.7 billion, and the company expects a 1Q07 restructuring charge of approximately $50 million.

For 2007 on the whole, officials said Intel anticipates a gross margin of 50 per cent, plus or minus a few points, R&D at approximately $5.4 billion, MG&A would be about $5.3 billion, and capital spending is pegged at $5.5 billion plus or minus $200 million.