Intel Channel Shines In Q4

During the company's fourth quarter 2001 earnings call with analysts Tuesday evening, Paul Otellini, Intel's vice president and general manager of the Intel Architecture group, said channel sales in Q4 outpaced non-channel sales.

"On the channel sales in Q4, they slightly outgrew the non-channel sales," Otellini said. "They set a record."

Overall, Intel recored a profit of 15 cents per share for the quarter, on revenue of $6.98 billion, beating analyst estimates of 11 cents per share.

During the call, Otellini also acknowledged the shortage of Pentium 4 chips available through the indirect distribution channel.

"We do hope to meet demands for Pentium 4 in the March quarter, although we may not meet it for every moment in the fourth quarter," he said. "But as we ramp production, we think we are okay for the quarter as a whole.

"We know the channel inventories are well below our goals" he added. "We are looking to a point in time where we finally can replenish them."

Otellini told analysts that Intel saw a strong demand worldwide for products driven by the successful transition to Pentium 4.

"The fourth quarter came in better than we expected, as we saw strong worldwide demand for our computing related products driven by our successful transition to the Pentium 4 processor," he said, noting that the company exceeded its shipment goal for Pentium 4 established at the beginning of 2001.

In other areas, Flash memory revenue was flat, while communications and networking products continued to see weakness.

Otellini said the Asia-Pacific region grew to become Intel's largest geography in Q4, the first time in history where it surpassed the Americas. He cited both OEM and channel sales as leading growth drivers.

He said Intel set a new record for microprocessor sales out through its distributor channel. "This channel continues to be very effective in moving our latest technologies," said Otellini, noting that Pentium 4 processors represented 40 percent of Intel's processors sold through the distribution channel.

Looking forward, Otellini said demand in the enterprise segment has stabilized and shows signs of improvement, though demand for network and telecom users remains weak.

"We have seen strong offshore continuous growth driven by emerging markets, but we are all still waiting to see if there will be Fortune 500 resurgence in terms of purchases," he said. "We see no large-scale evidence at this point."