Security Now! // Episode 116

Security Now! // Episode 116 This week on Security Now! Leo and Steve sit down for another one of their special question and answer sessions. They tackle over a dozen questions from their listeners, and address comments and other loose ends. Security Now! Read more…

Intel posts lower profit but expects turnaround

23.10.2006 06:34

SAN FRANCISCO Saying the worst is over, Intel has reported that its third- quarter profit fell 35 percent as it sought to reverse a slide in its market share.

The report, released Tuesday, capped a quarter in which the company refreshed its product line, announced plans to lay off more than 10 percent of its workers and began to cut $5 billion in expenses. The company's shares rose in after-hours trading as the results beat analysts' forecasts.

Intel's chief financial officer, Andy Bryant, said the company's price competition with Advanced Micro Devices, which has taken a huge toll on profit, was likely to ease in the fourth quarter.

"We made good progress during the third quarter toward our goal of a strong second half," Bryant said.

Intel's net income declined to $1.3 billion, or 22 cents a share, compared with $2 billion, or 32 cents a share, a year earlier. Wall Street had forecast an earnings decline of 17 cents a share.

Revenue fell 12 percent, to $8.74 billion, compared with analysts' forecast of $8.62 billion, according to a survey by Thomson First Call.

Although Intel's revenue and profit were down over last year. Compared with the second quarter, revenue rose 9 percent and profit rose 47 percent.

"The biggest surprise was that there were no surprises this time," said Cody Acree, an analyst at Stifel Nicolaus. "The biggest impact for investors was relief that the company may be starting to deliver on its promise of a turnaround."

Intel also delivered a fourth-quarter forecast roughly in line with analysts' expectations. Bryant said he expected revenue for the fourth quarter to be $9.1 billion to $9.7 billion, while analysts' forecasts call for $9.5 billion.

Intel's chief executive, Paul Otellini, said that the company's retrenching efforts were paying off and that it was regaining market share lost to AMD. Intel ended the second quarter with its lowest market share in four years. The company's share of the global chip market fell to 11.4 percent in the second quarter, down from 13.2 percent in the first quarter.

"We believe we gained overall share this quarter, based on record shipments of servers and mobile processors," Otellini said.

"Our goal has been to regain share throughout this year and that remains our goal."

But some analysts said Intel's progress in stemming market share losses would not be clear until Advanced Micro announced its quarterly earnings Wednesday.

Adam Parker, an analyst at Sanford C. Bernstein, said he believed Intel was still facing intense competitive pressure and that it would continue to slip through next year.

"It's a mixed-bag quarter for Intel," Parker said. "I don't see the market share gains they're talking about."

In contrast to Intel, Parker said he expected Advanced Micro to announce revenue growth of 10 percent to 13 percent.

Security Now! // Episode 116

Intel posts lower profit but expects turnaround

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