Wednesday, April 14, 1999

"A compact organization lets all of us spend our time managing the business rather than managing each other." -- Warren Buffett

Latest Market Numbers

Intel Posts Mixed Results

Intel (Nasdaq: INTC) posted higher-than-anticipated first-quarter earnings, but revenues fell short of analysts' expectations due to weak demand for personal computers. The world's largest chip maker reported Q1 earnings of $2 billion, or $0.57 a share -- $0.02 ahead of analysts' mean estimate of $0.55, and 58% higher than last year's split-adjusted EPS of $0.36.

Revenues gained 18% to $7.1 billion from $6 billion in the same year-earlier quarter, but were down 7% from the $7.6 billion Intel generated in the preceding quarter. In January, the company had said Q1 revenues would be flat with or lower than the Q4 number on seasonal weakness. Still, analysts had projected revenues of $7.4 billion, though gross margins of 59% topped forecasts, one percentage point ahead of the previous quarter, due to the company's ongoing cost-cutting efforts.

Intel said it expects second-quarter revenues to be "flat to slightly down" from the first quarter again because of seasonal trends. The company also anticipates that Q2 gross margin percentage will be roughly even with 59% in Q1, just ahead of its expectation of 57% for the year. Meanwhile, Q2 expenses are expected to be 6% to 10% higher than Q1's $1.6 billion due to higher merchandising and research and development (R&D) spending.

Intel President and CEO Craig Barrett said the company is seeing "positive results" from the launch of new products across all of its segments, including the Pentium III and Pentium III Xeon processors and the latest Celeron and mobile Pentium II chips. To read Intel's full earnings release, click here. To listen to the conference call, click here.

News to Go

Telecommunications equipment maker Lucent Technologies (NYSE: LU) said it expects to report fiscal Q2 earnings per share "in line with or exceeding" analysts' mean forecast of $0.15. The company added that it's "on target" to post more than $8 billion in revenues, which would represent an increase of more than 30% year-over-year. Lucent plans to report results April 22. The company said it remains "very confident" about its short-term and long-term prospects and that for the year, it continues to expect revenue growth of 19% to 20% and EPS growth of around 35%, before one-time items.

Hewlett-Packard (NYSE: HWP) clarified its CEO's bullish comments yesterday and said it expects fiscal 1999 revenue growth of 6% to 8%, not double-digit growth. The CEO's prediction pertained to the company's worldwide PC unit growth, not the whole company. HP added that this guidance is "consistent with Wall Street analysts' expectations."

Office supplies retailer Office Depot (NYSE: ODP) said it plans to improve its website and expand its online business internationally. It expects to be profitable this year as it aims to triple last year's Internet sales and is on track to open 105 new stores and remodel 20% of its stores before the end of the year.

Research firm First Call Corp., which is best known for tracking analysts' earnings estimates, will begin publishing two sets of EPS estimates for 20 Internet companies, according to The Wall Street Journal. The move comes in response to Wall Street's demand for projections that exclude merger-related costs for goodwill, the premium paid for acquired assets. First Call will publish cash-flow earnings per share, or cash EPS, which in most cases will be higher than regular EPS.

Earnings to Go:

(NYSE: BFO) -- Q1 EPS: $0.49 vs. $0.44 last year; estimate: $0.49
E-Tek Dynamics (Nasdaq: ETEK) -- fiscal Q3 EPS: $0.14 vs. $0.06 last year; estimate: $0.11
Ethan Allen Interiors (NYSE: ETH) -- fiscal Q3 EPS: $0.76 vs. $0.64 (before charges) last year; estimate: $0.73
Fleet Financial (NYSE: FLT) -- Q1 EPS: $0.72 vs. $0.53 last year; estimate: $0.69
Hertz (NYSE: HRZ) -- Q1 EPS: $0.45 vs. $0.33 last year; estimate: $0.39
Infoseek (Nasdaq: SEEK) -- fiscal Q2 EPS: loss of $0.39 (before charges) vs. loss of $0.06 last year; estimate: loss of $0.41
J.P. Morgan (NYSE: JPM) -- Q1 EPS: $3.01 vs. $1.80 last year; estimate: $1.73
Motorola (NYSE: MOT) -- Q1 EPS: $0.28 vs. $0.23 last year; estimate: $0.24
Seagate Technology (NYSE: SEG) -- fiscal Q3 EPS: $0.49 (before charges) vs. loss of $0.10 last year; estimate: $0.46

More Foolishness

D.C.-area Fools, come out to a golf shoot-out this Saturday, April 17, to benefit Tim Aycock, a techie here at the Motley Fool who is undergoing cancer treatment. Come have fun and meet Tom and David Gardner. Donations welcomed. Click here for more info... Polling All Fools: Did Compaq deserve the knock following its earnings warning? Cast your vote today.

-- Tuesday's Evening News
-- Fool Community
-- Post of the Day
-- Latest Fribble

Also, check out the Lunchtime News at 12:30 p.m. for updates on the top stories of the day, and remember to start each business day with Breakfast With the Fool at 9 a.m.

Let us know what you think of this feature. Send all comments and suggestions (including Foolish quotes) to the Breakfast Fools.

Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor