San Francisco: Intel Corporation announced a dip in profit despite record-high revenues of $9.7 billion in the first three months of 2008.
The world’s biggest chip maker reported net income of $1.44 billion or 25 cents per share, in the first quarter compared with profit of $1.64 billion or 28 cents per share, in the same period last year.
Restructuring and asset cost trimming reasons for dip
The California company said restructuring and asset costs trimmed profit by 4% per share. Intel executives put a positive spin on the earnings report, saying the firm saw “healthy demand” for its computer chips in all categories.
“Our Q1 results demonstrate strengthening core business and a solid global market environment,” said Intel chief executive Paul Otellini. “Looking forward, we remain optimistic about our growth opportunities as we continue to reap benefits of our 45nm technology leadership,” Otellini said, referring to a new generation of ultra-small, high-performance chips Intel brought to market late last year.
“The competitive position of our core business is superb,” Otellini said. “We expect our differentiation to grow as we continue to ramp this technology.”
Demand in the business computer market for “multi-core” chips built with two or four of the new microprocessors hit an all-time high, according to Intel.
Intel has taken market share from rival Advanced Micro Devices, which is to deliver its own 45nm chips to market this year.
Costs of getting factories cranking out new-generation chips were among the factors that ate into Intel’s profit for the quarter, according to company executives.
Glut in flash memory market
A major drag on Intel’s profit was a glut in the flash memory market that resulted in prices dropping by about half as the chip maker brought a new factory online to make those products.
Intel also spent $2.5 billion buying back 122 million shares of its stock and paid out a record high dividend to shareholders.
Intel predicted its revenues for 2008 will be 7% higher than last year despite “a challenging flash market and a volatile macro-economic environment.”
The confident outlook outweighed the slip in profit for the quarter. Intel’s stock price jumped nearly 8% to $22.57 in after-hours trading that followed the release of the earnings report.