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Thu, Jan 18, 2007 - Page 10 News List

Price war cuts into Intel profits

PLUNGE The world's largest chip maker recorded a 39 percent drop in fourth quarter profits, but said it had sold a record number of processors and memory chips

AP , SAN JOSE, CALIFORNIA

Intel Corp's fourth-quarter profit plunged 39 percent as the world's largest chip maker endured a painful price war with smaller rival Advanced Micro Devices Inc and continued to pay for a massive restructuring.

Still, Intel said on Tuesday it sold record numbers of microprocessors and flash memory chips and the company managed to beat analysts' tepid expectations.

Intel said net income for the period ended Dec. 30 was US$1.5 billion, or US$0.26 per share, versus US$2.45 billion, or US$0.40 per share, in the same period a year ago.

Revenue for the quarter was US$9.7 billion, down 5 percent from US$10.2 billion a year ago.

Excluding one-time charges, Intel said it earned US$1.7 billion, or US$0.30 per share, beating analyst estimates.

Analysts were expecting the company to earn US$0.25 per share on US$9.44 billion in revenue for the quarter, a survey by Thomson Financial showed.

"Intel's product and technology leadership yielded a strong fourth quarter with higher selling prices and record unit shipments in the fastest growing segments of the market," Intel CEO Paul Otellini said in a statement.

The company said it expected revenue for the first quarter of this year to be between US$8.7 billion and US$9.3 billion and that gross margin for the full-year is expected to be about 50 percent, plus or minus a few percentage points. Analysts said the margin forecast came in slightly lower than expected.

The results were announced after the stock markets had closed.

In after-hours trading, Intel shares fell US$0.20, to US$22.10. Earlier, the companies stock gained US$0.17 to close at US$22.30.

For the year, Intel said revenues were US$35.4 billion, and it earned US$5 billion, or US$0.86 per share.

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