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Intel Reports Weak Earnings, Shuffles Management

Intel Reports Weak Earnings, Shuffles Management

by , 3:15 PM EDT, July 20th, 2006

While Apple posted strong financial numbers on Wednesday, its computer chip supplier, Intel, on the same day said that its second quarter profit of US$885 million was less than half of the $2 billion in the year-ago period. Its $0.15 EPS on $8 billion in revenue was also down from the $0.33 EPS on $9.2 billion in revenue last year.

"The company cited decreases in the number of microprocessors sold, their average selling price, and the number of motherboards sold," according to an IDG News article. "The sole bright spot was a rise in the number of flash memory units sold, but that was not enough to rescue Intel from sinking revenues around the globe."

In response to the results, Intel on Thursday said that it would shuffle its top management. The company is already in the midst of a reorganization that will likely result in layoffs.

IDG News quoted The Envisioneering Group analyst Rick Doherty as saying: "People who have been at the company awhile knew that there was duplication in departments, and they were not as lean and mean as they could be. This was not a surprise so much as recognition. Undoubtedly, this will help."

Intel spokesman Robert Manetta said that the reshuffling will reduce the number of people reporting to CEO Paul Otellini, which "frees him up to do more strategic thinking."

Observer Comments

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Close Name:Biff Posts: 1479 Joined: 08 Apr 2004
Subject:

Reminds me of the Apple restructuring from a few years back. And now look at them. Consider Intel's technology and product roadmap and I think the long-term outlook for their stock should be obvious. Wait for rock bottom and then buy!

AMD was everybody's darling for a while, but they are going to get CRUSHED.

Close Name:chaokwan Posts: 1 Joined: 20 Jul 2006
Subject: Apples and Oranges

comparing apple stock (bk then) and intel stock (now) is like comparing apples and oranges, or a pleasure yatch and oil tanker ... apple was a $5B company (bk then), intel is a $100B company (now). i won't expect the same 10x improvement to intel's stock price if i were u.

Close Name:Biff Posts: 1479 Joined: 08 Apr 2004
Subject:

Sorry I didn't see any numbers in my post. I made two statements. One was that this reminds me of Apple's restructuring a while back. I appologise, for while the similarties are obvious to someone who has been following the technology industry for a long time, those with less knowledge may be confused.

A few years back, Apple had a wave of restructuring and layoffs to trim the fat and make the company operate more efficiently. This was a prelude to the increased profits and success of today. Not the cause for the success, but a necessary step along the way.

My second statement was a very general outlook on Intel's future. Now for those not familiar with the CPU business, Intel was the darling up until a few years ago. At that point it appeared that Intel had stopped innovating as they were turning out very little improvment in CPU speed or performance. During this time AMD was able to catch up and steal quite a bit of busienss from Intel. What we did not realize at the time was that Intel had hit a fundamental wall in existing processor technology and was busy finding solutions to the problem. What we are seeing coming out of Intel now are the first results of all that work. Meanwhile, AMD is nearing that "wall" and does not have anywhere near the resources to cross the gap that Intel is already over. Then take into account that Intel's product roadmap would be impossible for a company of AMD's size and the fact that Apple is now directly impacting that roadmap. It's easy to see why Intel is poised for big success in the near future.

I hope that is more clear for you. It's seems a little silly to start spouting out numbers. It's a bit early for that.

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