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Intel profit 'in the pink' despite price war

Intel profit 'in the pink' despite price war

Intel said its quarterly profit rose 44 percent over last year, reaching US$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 (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 reorganisation that included the layoffs of thousands of workers in 2006, and at least 1800 more layoffs planned for August. The company incurred restructuring charges of $82 million during the most recent quarter as it continued to adjust to the changes, Intel said on Tuesday.

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.

Those flash memory results helped to push Intel's gross margin down to 46.9 percent for the quarter, lower than the company's goal of 48 percent, Intel Chief Financial Officer Andy Bryant said.


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