Intel's Earnings Torpedo

MORGAN STANLEY DEAN WITTERPage 4Intel Earnings Model(Dollar amounts in millions, except per-share data; fiscal year ends 12/31)1Q00 2Q00 3Q00E 4Q00E 2000E 1Q01E 2Q01E 3Q01E 4Q01E 2001ERevenues $8,021 $8,300 $8,700 $9,600 $34,621 $9,400 $9,500 $10,400 $11,700 $41,000Sequential Change -2.3% 3.5% 4.8% 10.3% -2.1% 1.1% 9.5% 12.5%Change vs Year Ago 12.9% 23.0% 18.7% 16.9% 17.8% 17.2% 14.5% 19.5% 21.9% 18.4%Cost of Goods 2,964.0 3,083.0 3,306.0 3,504.0 $12,857.0 3,525.0 3,610.0 4,004.0 4,504.5 $15,643.5Percent of Revenues 37.0% 37.1% 38.0% 36.5% 37.1% 37.5% 38.0% 38.5% 38.5% 38.2%Gross Margin 5,057.0 5,217.0 5,394.0 6,096.0 21,764.0 5,875.0 5,890.0 6,396.0 7,195.5 25,356.5Percent of Revenues 63.0% 62.9% 62.0% 63.5% 62.9% 62.5% 62.0% 61.5% 61.5% 61.8%R&D 951.0 971.0 1,020.0 1,060.0 $4,002.0 1,080.0 1,110.0 1,150.0 1,220.0 $4,560.0Percent of Revenues 11.9% 11.7% 11.7% 11.0% 11.6% 11.5% 11.7% 11.1% 10.4% 11.1%SG&A 1,124.0 1,223.0 1,350.0 1,590.0 $5,287.0 1,475.0 1,500.0 1,600.0 1,875.0 $6,450.0Percent of Revenues 14.0% 14.7% 15.5% 16.6% 15.3% 15.7% 15.8% 15.4% 16.0% 15.7%Operating Income 2,982.0 3,023.0 3,024.0 3,446.0 $12,475.0 3,320.0 3,280.0 3,646.0 4,100.5 $14,346.5Percent of Revenues 37.2% 36.4% 34.8% 35.9% 36.0% 35.3% 34.5% 35.1% 35.0% 35.0%Incremental Oper Margin -38% 15% 0% 47% 37% -63% -40% 41% 35% 29%Other Income (Exp) 640.0 2,341.0 900.0 900.0 $4,781.0 900.0 900.0 900.0 900.0 $3,600.0Percent of Revenues 8.0% 28.2% 10.3% 9.4% 13.8% 9.6% 9.5% 8.7% 7.7% 8.8%Profit Before Taxes 3,622.0 5,364.0 3,924.0 4,346.0 17,256.0 4,220.0 4,180.0 4,546.0 5,000.5 17,946.5Percent of Revenues 45.2% 64.6% 45.1% 45.3% 49.8% 44.9% 44.0% 43.7% 42.7% 43.8%Taxes 1,148.2 1,711.1 1,247.8 1,382.0 5,489.2 1,329.3 1,316.7 1,432.0 1,575.2 5,653.1Tax Rate 31.7% 31.9% 31.8% 31.8% 31.8% 31.5% 31.5% 31.5% 31.5% 31.5%Net Income, Ops 2,473.8 3,652.9 2,676.2 2,964.0 11,766.9 2,890.7 2,863.3 3,114.0 3,425.3 12,293.4Extraordinary Credit ($200.0) ($200.0)Total Net Income 2473.8 3452.9 2676.2 2964.0 11566.9 2890.7 2863.3 3114.0 3425.3 12293.4Percent of Revenues 30.8% 44.0% 30.8% 30.9% 34.0% 30.8% 30.1% 29.9% 29.3% 30.0%EPS Ops $0.35 $0.52 $0.38 $0.42 $1.67 $0.41 $0.41 $0.44 $0.49 $1.75Extraordinary $0.00 ($0.02) $0.00 $0.00 ($0.02) $0.00 $0.00 $0.00 $0.00 $0.00Total EPS $0.35 $0.50 $0.38 $0.42 $1.65 $0.41 $0.41 $0.44 $0.49 $1.75Change vs Year Ago 23.1% 97.8% 40.0% 23.5% 42.7% 16.6% -18.7% 16.2% 15.3% 6.1%Common & Equiv Sh (Mil) 6,994.0 7,005.0 7,010.0 7,010.0 7,004.8 7,010.0 7,015.0 7,020.0 7,025.0 7,017.5Source: Company Reports and Morgan Stanley Dean Witter Research EstimatesIntel Corp - September 22, 2000Please refer to important disclosures at the end of this report.