INDUSTRY

SANTA CLARA, CA -- Intel Corporation today provided a planned update to the company's Business Outlook for the third quarter, which ends Sept. 29. Intel expects revenue for the third quarter to be within the previous expectation and slightly below the midpoint of the range provided on July 17. Intel's microprocessor business continues to follow seasonal patterns while the flash and communications businesses remain in line with the company's expectations at the beginning of the quarter. The gross margin percentage is expected to be within the previous expectation and below the midpoint of the range. Expenses (R&D, excluding in-process R&D, plus MG&A) are expected to be between $2.0 billion and $2.1 billion, lower than the previous expectation of between $2.1 billion and $2.2 billion. Gain (loss) from equity investments and interest and other is expected to be a net loss of $90 million, lower than the previous expectation of zero, due to lower than expected realized gains from the sale of equities. Intel expects to reduce its third-quarter tax provision by $100 million. The reduction is the result of an increase in the calculated tax benefit related to export sales for 2000 and the impact of a revision in the tax law related to export sales. This change in estimated taxes will be reflected in the federal income tax return for 2000 that the company expects to file this month. Excluding the effect of this adjustment and the effect of non-deductible acquisition-related costs, the tax rate for 2001 is still expected to be approximately 25.7 percent. All other expectations are unchanged. Intel's third-quarter 2001 Business Outlook appears along with the company's second quarter 2001 earnings release, available at www.intc.com/intel/finance/earnings.htm