Intel unveils first quarter financial results

— 11:59 AM on April 20, 2006

Intel has announced its financial results for the first quarter of this year, reporting revenue of $8.9 billion, operating income of $1.7 billion, and net income of $1.3 billion. Those are down 5%, 44% and 38% from last year's first quarter results, respectively, and a 12%, 49% and 45% drop from the last quarter. Gross margin was 55.1% for this quarter, compared to 59.3% and 61.8% for last year's first and fourth quarters. Intel says the low margin was due to "lower microprocessor revenue and higher inventory write-downs." Regarding the other disappointing results, Intel CEO Paul Otellini claims:

"We believe PC growth rates have moderated over the course of the past few quarters, leading to slower chip-level inventory reductions at our customers and affecting our revenue in the first half of the year."
Naturally, Otellini stresses the upcoming third quarter launch of new Core-based chips, including Conroe, which he says will give Intel "performance leadership across the server, desktop and mobile segments." He also touts "excellent operational progress," along with good market penetration of the new Centrino Duo and Viiv platforms. However, Intel's second quarter outlook is still grim, with expected revenues of $8.0-8.6 billion and 49% gross margin—down from last year's $9.2 billion and 56.4% for the second quarter.

In contrast to Intel's troubles, AMD boasted stellar first quarter results last week. Its net sales were up 70.5% from the same time frame last year, and operating income rose by an impressive 304.7%. Gross margin also increased to 58.5%, up from 52.7% a year ago. AMD does nonetheless expect similarly poor second quarter results, with sales due to be "flat to slightly down" from this quarter.

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