Intel profits decrease despite record revenue

Intel announced record first-quarter revenue of $9.7 billion (£4.9 billion) for the first quarter of 2008. But it also revealed that its net income (profits) had fallen by 12 per cent to $1.4 billion (£0.7 billion).

The chipmaker claimed that the record revenue demonstrated its strengthening core business and a solid ability to cope with the uneasy global market. The chipmaker also had an operating income of $2.1 billion (£1 billion) (up 23 per cent from last year).

Intel explained that the fall in net income resulted from an increased tax rate -- up to 34 per cent this year against 16 per cent last year. Cheaper NAND memory prices and the purchase of Numonyx had also affected figures.

Intel said that it saw growth of about eight per cent in the European market. Europe accounted for some 19 per cent of Intel's total business.

On an earnings call last night Intel chief executive Paul Otellini denied suggestions that its European business was slowing down: "We had a very good Q4 in Europe and a very good Q1 in North America... so from a macroeconomic standpoint our two most mature markets are not showing any signs of weakness."

"I was in just in Europe two weeks ago meeting with customers two weeks ago and I did not pick up anything than what I have indicated today."

According to Intel UK MD Graham Palmer, the upcoming Atom low-power processor was a huge opportunity for Intel in Europe and the US markets, but also in emerging markets.

"The Atom processor will allow us to have physically smaller sized devices but also at lower price points," said Palmer. "It is based on our 45 nm chips which mean they are a lower cost to manufacture for us. We can make good margins on them."

Asked about the recent problems at Intel's biggest competitor AMD, Palmer told IT PRO:

"Intel can only focus on what Intel does. We've done an extremely good job driving our management capability and delivering on our promises," he said. "From a market share perspective, we don't comment and we'll let the analysts pore over the numbers."

He added: "Fundamentally we feel that we have delivered great technology in the market and that has been rewarded by our customers with our business."

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