Intel's $350 million US loss

WE GOT BACK FROM our non-Internet ready redoubt near Kupfermuhle (Coppermill) in Germany to note that the Intel PR engine continued to overclock like crazy. The fans were spinning, the turbines were whining, and the clutch was, er, clutching.
Not to be outdone by TSMC or other fab-like firms, Intel announced it had managed 90 nanometer SRAM, just a prelude, we're sure, to a PR frenzy when Prescott becomes something more than just a concept next year.

But we wished we'd noticed the piece on Bloomberg that said Intel lost $350 million in the US last year, with its profits delivered from aliens abroad.

The firm was forced to deliver an SEC filing mid week that showed in its fourth quarter that APAC had outstripped its home US market for the first time.

This is undoubtedly a consequence of the terrible events that hit the US in the last quarter, but most of the losses were down to the egregious, that is to say surpassing, Intel Capital.

In the previous year, Intel had managed to somewhat correct its annus horribilis by INTC Capital, which delivered fine results for the chip giant.

Those results were not forthcoming, and although the firm went through its quarterly and mid-quarterly analysts meetings in 2001 by rote, most of the US press reported that "sentiment" for Intel was high.

In fact, when we disclosed Intel had nearly made a loss during last year, it was as if we'd suggested that the Emperor was parading around with no clothes on.

In story after story, we suggested that the fact "liens" had been placed on La Intella in the US meant that the readies weren't quite as ready as they were previously.

Some historical financial information for INTC is available on its Web site, click here for the Excel spreadsheet. Here's, it's apparent that Intel is not going to run out of cash and trading assets any day soon, but compared to the same time in 2001, they're down by about $2 billion.

It also looks like there's too much stock (inventory) in there, while its long term investments have fallen by over $2 billion compared to last year and by a staggering $6.5 billion over two years. As we've pointed out before, Intel's cashflow is getting a battering, and as we've also said previously, INTC is investing a great deal in fabs and R&D - this is the only way the firm can carry on in the future.

The telecomms market almost completely fell apart last year and wireless failed to deliver the expected profits. This is because wireless devices that Intel makes, while they offer fantastic technology, are essentially low cost and low margin items.

The real red meat for Intel remains its processor business, at the desktop and the server end with ever so fat margins.

As we exclusively reported in June last year, the chip giant was forced to cut and slash and introduce early all sorts of technology just to run on the spot, like the Red Queen, owing to the worst semi recession ever.

One analyst, we noted, said that Intel might well be forced to do the same thing in 2002. We've no word of that yet - the pricelists we've seen show some stability - but just like Intel decided to intro its Pentium 4Ms early, so it can rip up roadmaps and start all over again if things get tough.

That is the great strength of Intel. But as it's a technology company, it's got to get that part of it right as well. µ

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