Gross margin percentage in the third quarter of 1998 is expected to be up a couple of points from 49 percent in the second quarter. Intel s gross margin expectation for the full year 1998 is unchanged at 52 percent, plus or minus a few points. In the short-term, Intel s gross margin percentage varies primarily with revenue levels and product mix. The company believes that over the long-term, the gross margin percentage will be 50 percent plus or minus a few points. Intel s long-term gross margin percentage will vary depending on product mix.
Expenses are dependent in part on the level of revenue.
The company has made progress in the second quarter in reducing headcount. The timeframe to complete the reduction by approximately 3,000 employees, primarily through attrition, has been extended by one quarter to the end of the year. The company reduced headcount by approximately 750 people, excluding approximately 1,800 people added as the result of the acquisition of Digital Equipment Corporation s semiconductor manufacturing operations. The tax rate for the remaining quarters of 1998 is expected to be 33.0 percent. The acceleration of 0.18 micron manufacturing process technology in 1999 allows the company to reduce spending on current generation technology.