Intel's Q4 Business Below Expectations
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 chips.
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 sales.
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."
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 chips.
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 sales.
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."
