Intel profit jumps 44 per cent despite price war

Intel Corp. said its quarterly profit rose 44 percent over last year, reaching USUS$1.3 billion as low selling prices for its microprocessors were offset by higher than expected unit shipments.

The results came despite an ongoing price war as Intel and its rival Advanced Micro Devices Inc. (AMD) struggle for larger shares of the processor market. Both companies have been cutting prices on their chips as they upgrade their products from standard chips to dual-core and quad-core processors.

Intel is also in the final stages of a corporate reorganization that included the layoffs of thousands of workers in 2006, and at least 1,800 more layoffs planned for August. The company incurred restructuring charges of US$82 million during the most recent quarter as it continued to adjust to the changes, Intel said on Tuesday.

Despite those challenges, Intel earned US$0.22 per share on revenue of US$8.7 billion for the quarter ending June 30, beating Wall Street expectations that the company would earn US$0.19 per share on revenue of US$8.54 billion, according to analysts polled by Thomson Financial. Intel also beat its own mark from the second quarter of 2006, when it earned US$0.15 per share on revenue of US$8.01 billion.

One factor in Intel’s favor this quarter was the May launch of its Santa Rosa upgrade to the popular Centrino notebook PC platform, Intel CEO Paul Otellini said in a conference call with investors. Intel bundled an improved processor, chipset and wireless card to maintain its large share of the fast-growing notebook market segment.

Intel also saw strong sales for its quad-core Xeon server chips, although the company suffered from competitive market prices in low-end consumer PC sales, Otellini said. Intel also had mixed results in flash memory chips, where it generated strong revenue from NAND chips but NOR flash chip sales were weaker than expected.

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Jim Love, Chief Content Officer, IT World Canada

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