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Intel expected to reap benefits of investments

Annual sales * 2003: US$30.14 billion * 2004: US$34.21 billion * 2005: US$37.9 billion (projected)

Intel Corp is well on its way to its third consecutive year of double-digit growth this year as it reaps benefits from investments in factory capacity, mobile technology and emerging markets, the chipmaker's president said on Thursday.

Paul Otellini, who replaces Craig Barrett as chief executive in less than two weeks, said the company continues to outpace rivals because it is willing to invest even in lean times. As a result, Intel has the technology and capacity in place when demand grows.

"Growth doesn't just happen. You make it happen," he told Wall Street analysts during a conference in New York City. "You make investments and then you capitalize on them."

The company did not update its financial forecasts, though officials stressed that the business remains healthy.

Last month, Intel said it expected second-quarter sales to be between US$8.6 billion and US$9.2 billion. For the year, analysts expect the world's largest chipmaker to earn US$1.56 per share on sales of US$37.9 billion, according to Thomson Financial.

Santa Clara-based Intel reported US$34.21 billion in sales last year, a 13.5 percent increase over the US$30.14 billion it posted in 2003. Sales grew 12.5 percent between 2002 and 2003.

In January, Intel announced a reorganization that created five business divisions that focus on specific markets, including businesses, homes, mobility and health care. All still include Intel's core chip architectures but will create enhancements for specific platforms.

Otellini pointed to Intel's Centrino brand as the first success in the shift. Introduced in 2003, it combines processor, chipset and wireless radio chips that were built to maximize performance and minimize power requirements.

"We've more than doubled the rate of growth of the marketplace by introducing this product and the features associated with it," he said.

Today, about 31 percent of all chips leaving Intel's factories will end up in mobile computers, compared with about 17 percent in 1999, he said. Centrino also helped stabilize falling notebook prices and grew Intel's market share in the segment.

"Centrino was a classic example of us executing flawlessly on the platforms, and this is the template for what we want to do in the other areas," Otellini said.

It's not clear when the next Centrino-like technology will emerge, but Barrett said Intel is planning a major new branding campaign later this year. He provided no other details.

Barrett, who has been CEO since 1998, will leave that position on May 18 to become chairman, replacing Andy Grove.
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