INDUSTRY

SANTA CLARA, Calif.--Intel Corporation today announced third-quarter revenue of $7.8 billion, up 15 percent sequentially and up 20 percent year-over-year. Third-quarter net income was $1.7 billion, up 85 percent sequentially and up 142 percent year-over-year. Earnings per share were $0.25, up 79 percent sequentially and up 150 percent from $0.10 in the third quarter of 2002. "Intel delivered excellent results in the quarter led by global strength in our computing-related business, resulting in record unit shipments of microprocessors and chipsets," said Craig R. Barrett, Intel chief executive officer. "Our resolve to invest aggressively during the downturn is paying off with double-digit revenue growth and a doubling of profit compared to a year ago. "Our product and technology leadership make us well positioned to take advantage of improving demand. Going forward, our strategy remains the same: Invest in leading-edge capacity, develop innovative new products, and target growth opportunities worldwide." BUSINESS OUTLOOK The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Oct. 13, 2003. Continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters. -- Revenue in the fourth quarter is expected to be between $8.1 billion and $8.7 billion. -- Gross margin percentage in the fourth quarter is expected to be approximately 60 percent, plus or minus a couple of points, as compared to 58.2 percent in the third quarter, primarily due to higher revenue. Intel's gross margin percentage varies primarily with revenue levels, product mix and pricing, changes in unit costs and inventory valuation, capacity utilization, and the timing of factory ramps and associated costs. -- The R&D spending expectation for 2003 is $4.3 billion, as compared to the previous expectation of $4.2 billion. -- Expenses (R&D plus MG&A) in the fourth quarter are expected to be between $2.2 billion and $2.3 billion. Expenses, particularly certain marketing- and compensation-related expenses, vary depending on the level of revenue and profits. -- Capital spending for 2003 is expected to be between $3.6 billion and $3.7 billion, as compared to the previous expectation of $3.5 billion to $3.9 billion. -- Gains or losses from equity investments and interest and other in the fourth quarter is expected to be zero due to the expectation of a net loss on equity investments of approximately $35 million, primarily as a result of impairment charges. -- The tax rate for the fourth quarter is expected to be approximately 31.5 percent. The increase versus the previous expectation of 30.5 percent is primarily driven by higher expected profits for the year with a higher percentage of profits expected in high-tax jurisdictions. The tax rate expectation is based on current tax law and current expected income, and assumes Intel continues to receive tax benefits for export sales. The tax rate may be affected by the closing of acquisitions or divestitures, the jurisdiction in which profits are determined to be earned and taxed, and the ability to realize deferred tax assets. -- Depreciation for the fourth quarter is expected to be approximately $1.2 billion. -- Amortization of acquisition-related intangibles and costs is expected to be approximately $65 million in the fourth quarter.