Intel Q1 sales down 9%

By Colleen Taylor, Contributing Editor -- 4/18/2007

Market-leading chipmaker Intel Corp. late Tuesday announced Q1 financial results with revenues of $8.9 billion, down 1 percent year-over-year and down 9 percent from Q4 2006 revenues.

The company posted Q1 operating income of $1.7 billion, down 3 percent from the same quarter in 2006 but up 13 percent from Q4. Particularly strong was Intel's Q1 net income at $1.6 billion, up 19 percent from Q1 2006 and up 7 percent from Q4 2006.

Intel also reported earnings per share (EPS) of 27 cents, up 17 percent year-over-year and up 4 percent sequentially. The company said that its results included the effect of a $300-million reversal of previously accrued taxes that increased EPS by approximately 5 cents. Q1 gross margin was 51 percent, down from Q1 2006's 55.1 percent and down from Q4's 61.8 percent.

"The strong momentum of our industry-leading Intel Core microarchitecture product
family, combined with ongoing structural cost improvements, delivered solid financial results in Q1," Intel President and CEO Paul Otellini said in a statement. "Our product strength is reflected in the fact that average selling prices for the quarter held up well in a very competitive environment."

The company's "ongoing structural cost improvements" have included a number of major moves in the past year, including some 10,500 job cuts counting 1,000 managerial posts, a $600 million sale of its communications and application processor business to Marvell and the sale of its media and signaling business to Eicon Networks.

Intel said in its financial statement that it has already reached its goal of reducing the workforce to approximately 92,000 people, meeting the target one quarter ahead of schedule.
 
Looking ahead, Intel said it expects Q2 revenue to be down between $8.2 billion and $8.8 billion, and forecasted a drop in gross margin to 48 percent plus or minus a couple of points. For the full year 2007, the company said it expects gross margins of 51 percent plus or minus a few points, higher than its previous expectation of 50 percent plus or minus a few points.

© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.