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BREAKFAST WITH THE FOOL
Intel's Q3 Sales Off Thanks to Europe

By LouAnn Lofton (TMF Lou2)
September 22, 2000

Computer chip-maker Intel (Nasdaq: INTC) announced after the closing bell yesterday that its third-quarter revenues will fall below expectations. The company's revenues had been expected to be between $9 billion and $9.1 billion, which is 9-10% higher than its revenues from its second quarter. However, Intel told the Street yesterday that its revenues will increase only 3-5% sequentially, which translates into sales between $8.5 billion and $8.7 billion.

The main reason cited for the shortfall? The same reason, in part, given by Gillette (NYSE: G) and Goodyear (NYSE: GT) for their recent profit warnings: Europe. A troubled economy, weakening euro, and high-flying gasoline prices are taking their toll on multinationals and their sales and earnings results in that part of the world. Currency concerns hit companies such as Gillette and Goodyear harder than they did Intel, though, which is seeing consumer confidence issues come into play. Intel spokesman Tom Beerman did point out that in all of the company's important markets outside of Europe, the situation is stable.

This sales warning is Intel's first in more than two years. The company didn't provide any earnings guidance for its third quarter. The consensus estimate for the quarter (before yesterday's warning, of course) according to First Call/Thompson Financial is $0.41 a share, compared to the $0.28 a share the company earned in its third quarter last year. Shares of Intel were marked down in after-hours trading by about 20%.

For more on Intel, make sure to tune in to today's Rule Maker report.

News to Go

Internet company CMGI (Nasdaq: CMGI) announced its fourth-quarter results yesterday. The company lost $633.7 million, or $2.17 per share, for the quarter. This easily beat the consensus First Call/Thompson Financial estimate of a loss of $2.45 a share. In the year-ago quarter, the company made $2.12 a share, or $452.7 million, mostly related to the sale of GeoCities to Yahoo! (Nasdaq: YHOO). The company also announced that it plans to take search engine Alta Vista public by the end of the first quarter 2001. CMGI owns 82% of Alta Vista, which announced last week that it's cutting 25% of its staff in a drive toward profitability.

British Airways (NYSE: BAB) and KLM Royal Dutch Airlines have broken off their merger talks, the companies said yesterday. Blamed for the breakdown were regulatory issues, as well as commercial difficulties. British Airways chief executive Rod Eddington and KLM chief Leo van Wijk said in a statement, "We always recognized that this would be a complex transaction, involving not only commercial and economic issues, but also aero-political, regulatory and other matters. Although we made considerable progress, it has not been possible to resolve these."

Liberate Technologies (Nasdaq: LBRT) posted its first-quarter results yesterday. The software company lost $0.09 a share, which beat the First Call/Thompson Financial consensus estimate by $0.12. Last year, the company lost $0.14 a share in its first quarter. Revenues were up 78% from the year-ago period to $9.4 million.

As reported in The Washington Post, America Online (NYSE: AOL) and Time Warner (NYSE: TWX) have made the necessary concessions to European officials in order to gain approval for the companies' $183 billion merger. The concessions apparently, in part, address the European regulators' concern that the merged company could use its power to dominate how music in Europe is delivered over the Internet.

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