Letter To Our Stockholders

In 1996, Intel's market value more than doubled - to $111 billion

Gordon E. Moore, Andrew S. Grove, Craig R. Barrett

We are pleased to report another outstanding year at Intel. Revenues totaled $20.8 billion, up 29 percent from $16.2 billion in 1995. Earnings per share rose 44 percent over last year, to $5.81.

Our performance in 1996 was driven by strong demand for our Pentium(R) and Pentium(R) Pro processors, which provide the brains for computers from servers to home PCs. We expanded the Pentium processor family in 1996 with a new 200-MHz Pentium processor and shifted the entry-level chip to the 120- and 133-MHz Pentium processors.

We continued to invest heavily in the manufacturing facilities that allow us to deliver more powerful microprocessors while keeping PC system costs low. In 1996, we announced plans for two new manufacturing sites: a new state-of-the-art wafer fab in Fort Worth, Texas, and an assembly and test facility in San Jose, Costa Rica.

About 70 million PCs were sold around the world in 1996, and a substantial majority of those PCs contained Intel microprocessors. This year, one trend in particular has driven this PC market growth: the spread of networked computing via the popularity of the Internet and internal corporate networks. In fact, 1996 was the year in which PC manufacturers and users around the world embraced the concept that computing is, by definition, networked.

We at Intel have long known that our growth depends on the continued expansion of the PC platform's capabilities. The more users demand of PCs, the more power will be required to drive them, and the more microprocessors will be sold. In response, we have expanded Intel's role in the computing industry over the last several years. Acting as a sort of R&D lab and strategic think tank to the industry, we work with PC makers, software developers and PC users to understand their future needs and wishes, and work intensely with industry leaders to develop products or specifications that meet those needs.

In 1996, we focused on two key initiatives that aim to solve persistent problems in computing and embody the exciting potential of a world of networked computers: connected CD-ROMs and down-the-wire manageability.

Connected CD-ROMs: Users have long been frustrated by the snail-like bandwidth performance of today's modem-and-phone-line Internet connections. We have worked with software developers to create a solution - connected CD-ROM software.

The bandwidth-hungry, multimedia environment and content of the program are delivered on a CD-ROM. These "hybrid applications" link to the Internet to provide updated content and real-time interaction with other users. We believe that connected PC software is the wave of the future for home PCs.

Down-the-wire manageability: Expansion of internal business PC networks has been hindered by the high costs of establishing, maintaining and updating such networks. Indeed, network management costs have raised the total cost of ownership of a single connected business PC to more than $7,000 annually, according to Gartner Group, a research and consulting firm.

To address this serious issue, we launched our Wired for Management initiative, aimed at reducing the total cost of ownership of business PCs. We and other industry leaders are delivering immediate hardware and software solutions to make it easier to install and maintain PC networks without sacrificing performance.

We know we can't wait for growth to come to us. We are responsible for our own future and work to make it as successful as possible by removing roadblocks to PC platform growth, developing preference for the Intel Inside(R) brand among PC users and supporting emerging PC markets around the world. Together, these strategies build value for our stockholders, which is, after all, our most important goal.

This has been an outstanding year. We have confidence in our strategies and capabilities, and we are determined to do what we can to continue expanding developments in computing and telecommunications.

As part of our continuous evolution of Intel's management team, in January 1997 we announced a realignment of titles and responsibilities in the Executive Office. Effective May 21, 1997, Craig Barrett becomes president and continues as chief operating officer. Andy Grove becomes chairman and continues as chief executive officer. Gordon Moore becomes chairman emeritus and continues, with Craig and Andy, to be part of the Executive Office. Together, we look forward to the continuing opportunities and challenges of our business in the coming year.

Gordon E. Moore
Chairman Andrew S. Grove
President and Chief Executive Officer Craig R. Barrett
Executive Vice President and Chief Operating Officer

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Content published April 8, 1997.