Intel profits dive 57%

Components giant Intel’s after tax profits dived 57% year-on-year for the quarter ending June 2006 to US$885m on sales down 13% at US$8bn. Sales in the European theatre were down 24% year-on-year and 19% sequentially at US$1.38bn as sales were below normal seasonal patterns as customers reduced processor inventory levels and pricing pressure continued to intensify.

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By  Stuart Wilson Published  July 23, 2006

Components giant Intel’s after tax profits dived 57% year-on-year for the quarter ending June 2006 to US$885m on sales down 13% at US$8 billion. Sales in the European theatre were down 24% year-on-year and 19% sequentially at US$1.38 billion as sales were below normal seasonal patterns as customers reduced processor inventory levels and pricing pressure continued to intensify. Intel President and CEO Paul Otellini commented: “In 2006 we are delivering the strongest product line-up in the industry, with many of these new products shipping ahead of schedule. Our new Intel Core microarchitecture is powering the world’s best microprocessors for PCs and volume servers, products whose performance and energy efficiency are generating unprecedented industry response and the largest number of design wins at launch in Intel’s history. We are also extending our lead in manufacturing technology, with the majority of microprocessor production this year on our advanced 65nm process.” Intel continues to push for an improvement in operational efficiency and results, slashing 1,000 management positions within the company and also planning the sale of its communications and applications processor business to Marvell Technology Group. Intel has forecast that its third quarter revenues will come in at between US$8.3 billion and US$8.9 billion with gross margin expected to hit 49% plus or minus a couple of points. Intel closed the second quarter with inventories of US$4.332 billion, up 21% from its first quarter figure. Intel has also announced a number of senior management changes including to its channel platforms group. “As part of the thorough analysis of Intel begun in April, we have examined the focus and structure of our top management levels, including our use of ‘two-in-a-box’ co-managers,” explained Otellini. “The moves announced today will help us speed decision making and bring new resources to bear in critical areas, while allowing me to spend more time on key strategic issues.” Both William Siu, VP and general manager of Intel’s channel platforms group, and Richard Wirt, VP, senior fellow and co-manager of the software and solutions group are retiring from Intel. Both executives will remain at Intel full time until the year-end to manage the transition within their organisations. The channel platforms group will now report to Sean Maloney, who has been named as the executive VP of Intel’s sales and marketing group. Maloney also takes on the role of Intel’s chief sales and marketing officer.

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