Intel’s Profit Falls 39% After Company Lowers Prices
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Intel Corp., the world’s largest computer-chip maker, said fourth-quarter profit fell 39% after the company lowered prices to compete with Advanced Micro Devices Inc.
Net income fell to $1.5 billion, or 26 cents a share, from $2.45 billion, or 40 cents, a year earlier, the Santa Clara, California-based company said yesterday in a statement. Sales fell 5% to $9.7 billion.
Earnings dropped as Intel fended off Advanced Micro with price cuts and started manufacturing new chips to win back orders. Chief financial officer Andy Bryant forecast gross margin will narrow to about 50% this year, missing analysts’ estimates, and said he expects a “continued competitive environment.”
“It looks like they are regaining share at some expense to price,” a manager of $35 billion at Baring Asset Management, which holds Intel shares, Greg Barlage, said. “The biggest question is the gross margin forecast for ‘07. Most people were looking for 51.5%.”
