Intel announced today that fouurth-quarter business will be below the company's previous outlook; revenue is being affected by significantlty weaker demand and the PC supply chain has been aggressively reducing component inventories.
The chip maker reported that profit plunged 90 percent and sales slipped
23 percent during the last three months of the year. Intel reported a
fourth-quarter revenue of $8.2 billion, operating income of $1.5 billion,
net income of $234 million and earnings per share (EPS) of 4 cents.
Profits were squeezed by a freeze in information-technology spending and a
shift toward low-margin processors for netbooks. The results also included
a billion-dollar negative impact from the previously announced reduction
in the carrying value of the company's Clearwire investments.
Clearwire specializes in WiMax technology that Intel is building into its
PC demand is sinking fast, which takes its toll on Intel because Intel
owns 80 percent of the market for microprocessors.
One area where Intel shines is controlling its manufacturing costs, where
it enjoys a big advantage over smaller rival AMD. Intel's quicker
transition than AMD to 45-nanometer manufacturing technology,has made each
chip cheaper to produce. That has helped cushion the blow of falling
AMD warned that its fourth-quarter sales will likely come in 33 percent
lower than last year.
"The economy and the industry are in the process of resetting to a new
baseline from which growth will resume," said Paul Otellini, Intel
president and CEO. "While the environment is uncertain, our fundamental
business strategies are more focused than ever. Intel will continue to
extend its manufacturing leadership, drive product innovation, develop new
markets and implement operating efficiencies that have already taken more
than $3 billion out of our ongoing cost structure since 2006. Intel has
weathered difficult times in the past, and we know what needs to be done
to drive our success moving forward. Our new technologies and new products
will help us ignite market growth and thrive when the economy recovers."