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Intel's Lowered Profit Results Due Today

April 14, 1998|From Bloomberg News

Intel Corp. today is expected to report lower first-quarter earnings as weak sales of its personal computer chips and falling PC prices hurt profit at the world's biggest chip maker.

Intel said on March 4 that it expected first-quarter revenue to be about $5.85 billion, down 9.3% from $6.45 billion a year earlier. Analysts expect the company to earn 71 cents a share, according to IBES International Inc. A year ago, Intel earned $1.98 billion, or $1.21 a share. Intel will report results after the close of regular U.S. trading.

Intel was hurt by a glut of personal computers in the market and slackening PC demand, which meant personal computer makers such as Compaq Computer Corp. and IBM Corp. needed to buy fewer chips.

Meanwhile, the Santa Clara-based chip maker was still reeling from a blow delivered last week by a federal judge who ordered the company to resume supplying Intergraph Corp. with sample computer chips and key technical information.

U.S. District Judge Edwin L. Nelson issued a preliminary injunction Friday siding with Huntsville, Ala.-based Intergraph in its patent and antitrust suit filed against Intel in a federal court in Birmingham.

Nelson's sweeping opinion gives a boost to Intel critics who want the Federal Trade Commission to file antitrust charges against the chip maker. Nelson said Intel was using its dominance in the market for central processing units, or CPUs--the brains of a computer--to leverage its way into other fields.

Company spokesman Chuck Mulloy called the decision a "very serious error" and said Intel probably will appeal.

In an 80-page opinion, Nelson said he agreed with Intergraph that Intel tried to coerce the smaller company into giving up some of its patent rights without charge. Intergraph said Intel withheld key information and delayed shipment of crucial products.

Nelson said that conduct violated federal antitrust laws. The judge said Intel was using its monopoly in the market for CPUs to thwart competition from Intergraph in graphics subsystems and workstations.

Intel argued it pressed Intergraph for patent concessions involving a microprocessor originally produced by Fairchild Semiconductor Corp. only after Intergraph demanded fees from companies that were using the disputed technology through licenses with Intel. The chip maker said those companies then asked Intel if it would indemnify them.

Shares of Intel rose $2.50 to close at $76.25. Intergraph shares jumped $1.25 to close at $9. Both trade on Nasdaq.

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