Intel's profit drops 57%

Posted by Wolfgang Gruener

Santa Clara (CA) - Intel today reported sales $8.0 billion and a net income of $885 million for the second quarter of this year. Compared to the second quarter of last year, revenue is down 13% from $9.2 billion, while the firm's profit dropped 57% from $2.0 billion.

Intel did not offer any reasons for the sharp decline in net income in the initial press release announcing the quarter result. Instead, chief executive Paul Otellini was quoted saying that "in 2006 we are delivering the strongest product lineup in the industry, with many of these new products shipping ahead of schedule." Otellini highlighted the debut of the firm's Core architecture that delivered "unprecedented industry response and the largest number of design wins at launch in Intel's history."

The plain numbers in the Q2 balance sheet, however, hint that Core has arrived just in time. The firm's server and workstation-focused digital enterprise group saw revenues decline from $6.0 billion in Q2 2005 to $4.62 billion in Q2 2006. Operating income fell from more than $2 billion to $931 million in the same time frame. Intel's flash business remained in the red, with loss increasing from $80 to $149 million.

Once again, Intel's mobile business saved the quarter with revenues climbing slightly from $2.62 billion to $2.69 billion over Q2 2005. The operating income of the mobile business, however, dropped from $1.22 billion to $946 million.

Following the announcement, Intel's stock dropped about 4% or $0.74 to $17.75 in after hour trading.