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DRIP PORTFOLIO
Intel Previewed
Fourth quarter announced tomorrow

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By Jeff Fischer (TMF Jeff)

ALEXANDRIA, VA (Jan. 12, 2000) -- Tomorow after the stock market closes, Intel (Nasdaq: INTC) will announce fourth-quarter and full-year 1999 results. According to consensus IBES estimates, the company is expected to report earnings per share (EPS) of $0.63, which would be 6% higher than its Q4 1998 results.

In its third quarter of 1999, Intel reported earnings of $0.55 per share on revenue of $7.33 billion, so the fourth-quarter estimate calls for 14.5% sequential EPS growth. Revenue should rise considerably, and Intel's gross margin should rise to around 60%. Margins for the third quarter of 1999, for comparison, were:

                        3Q99
Gross Profit            58.7%
Operating Profit        34.2%*
Net Profit              25.9%*   

*on a pro forma basis that
 excludes one-time acquisition
 and other charges

Margins measure the efficiency of a business. Gross profit is what is left after the cost of the product is deducted from sales. Intel has a high gross profit margin when compared to the total universe of public companies. For every $1 worth of product (typically computer chips) sold last quarter, Intel paid only 41.3 cents to produce it, meaning it cleared 58.7 cents.

Operating margins are found after deducting more costs, namely, the costs of running the business. Operating costs include salaries, rent, research and development, and anything else that goes into running the business. For every dollar of revenue earned in the third quarter of 1999, Intel spent about 24.5 cents running the business and paying employees. After adding this figure to the cost of the product itself, Intel was left with 34.2 cents in profit from every dollar of sales. Again, this is a very high operating profit, or margin, compared to the universe of public companies.

Net profit margin is what is left from sales after taxes, interest expenses, and other non-operating costs are deducted from the operating expense. Intel had 25.9% profit margins last quarter. Exceptional. Tomorrow, Friday, and next week we'll see how efficient the business was this time around when we study fourth-quarter results. Keep in mind that margins are just the start.

On Thursday, Intel will report results and hold its conference call in the late afternoon (Eastern Time), so that means that we'll only be able to quickly summarize the results tomorrow before this column is published. Beginning on Friday, however, we'll have much more to say.

To prepare for the company's quarterly report and compare tomorrow's results to past results, here are useful links:
Intel's Q3 Conference Call Summary and Look Ahead (10/13/99)
Intel's Q3 Results Covered by Drip Port (10/12/99)
Intel's Investor Relation Page and Q4 Conference Call Info
Intel's Message Board

Until tomorrow, think long term and Fool on!

Are you still looking for that 15 minutes of fame? Curious about stock splits, buying on margin, or when to sell? Do you have an investing question that you want to share with the world? Fool Radio wants to hear from you. If you would like to ask a question on this week's Motley Fool Radio Show, please drop an e-mail to macg@fool.com with your question and daytime phone number.

Drip Portfolio

1/12/00 Closing Numbers
Ticker Company Dly Pr Chg Price
CPBCAMPBELL SOUP-7/16$35.75
INTCINTEL CORP9/16$91.25
JNJJOHNSON & JOHNSON-7/8$93.50
MELMELLON FINANCIAL CORP7/16$30.13

  Day Week Month Year
To Date
Since
7/28/97
Annualized
Drip .80% 2.55% 1.60% 1.60% 31.99% 11.94%
S&P 500 -.44% -.64% -2.52% -2.52% 52.56% 18.72%
S&P 500(DA) -.44% -.64% -2.52% -2.52% 55.19% 19.55%
S&P 500(DCA) n/a n/a n/a n/a 28.31% 10.66%
NASDAQ -1.82% -.84% -5.39% -5.39% 145.29% 43.99%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
9/8/9722.3909INTC44.603$91.25104.58%
11/14/9711.292JNJ80.007$93.5016.87%
11/5/9828.3741MEL34.416$30.13-12.47%
4/13/988.174CPB54.586$35.75-34.51%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
9/8/9722.3909INTC$998.70$2,043.17$1,044.47
11/14/9711.292JNJ$903.44$1,055.80$152.37
11/5/9828.3741MEL$976.51$854.77($121.74)
4/13/988.174CPB$446.18$292.22($153.96)
  Cash: $24.32  
  Total: $4,270.28  


Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.

Note
Drip Port launched with $500 on July 28, 1997, adds $100 to invest every month, and the goal is to own $150,000 in stock by August of the year 2017. Due to the slow nature of dollar-cost-averaging and our relatively significant starting costs, we do not expect to seriously challenge the S&P 500 for the first three to five years as we build an investment base. The long-term advantages of dollar-cost-averaging still overcome the short-term disadvantages, however. Final note: our investment in Campbell Soup is frozen due to fees instituted in its investment plan. Click here for a history of all Drip Port transactions.





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