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Intel Remains Profitable but Pressured

Intel is the last technology company to announce disappointing fourth quarter and full-year earnings; the chipmaker’s revenue dropped 19 percent from Q3 and 23 percent from the same time last year. Intel, the world’s top producer of microprocessors and memory components, reported fourth quarter revenues of $8.2 billion and a profit of $234 million, down […]

Written By

Kathleen A. Martin

Jan 16, 2009

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Intel is the last technology company to announce disappointing
fourth quarter and full-year earnings; the chipmaker’s revenue dropped
19 percent from Q3 and 23 percent from the same time last year.

Intel, the world’s top producer of microprocessors and memory
components, reported fourth quarter revenues of $8.2 billion and a
profit of $234 million, down 9 percent over the same period in 2007.

While Intel’s full-year income of $37.6 billion was only off 2
percent compared to 2007, its net income of $5.3 billion was down 24
percent year over year.

The silver lining in Intel’s dark cloud was the news that chipset
and wireless connectivity products set new unit and revenue records.
Yet the total microprocessor average selling price was flat.

In its earnings statement, Intel said it “removed more than $800
million of cost from the company in 2008 under the structure and
efficiency program launched in 2006. Cumulative spending reductions
under the program to date exceeded $3 billion.”

Part of these savings can be tied back to employee layoffs which began in 2006.

While Intel anticipates continued challenges in a slow economy, its
outlook remains optimistic. However, message boards are littered with
reports of Intel carrying a backload of inventory and “channel
stuffing,” or selling product to partners to carry on their inventory
sold or unsold.

The earnings were far from a surprise for most analyst and investors
as market research firm IDC reported that worldwide PC shipments
dropped 0.4 percent in the fourth quarter from a year earlier, the
first year-to-year drop in six years.

Intel Remains Profitable but Pressured

Kathleen A. Martin

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