Intel Q3 profits take a 35% hit

Posted by Wolfgang Gruener

The successful introduction of Intel's Core microarchitecture wasn't enough to save the company's third quarter result. Compared to the same period of 2005, revenues were down about 12% from $9.7 billion to $8.7 billion, while profits dropped almost 35% from $2.0 billion to $1.3 billion. On a positive note, the balance sheet showed some recovery over Q2, when Intel reported a 57% decrease in revenues and a 13% decline in earnings year-over-year. Sequentially, profits improved in Q3 by 47%, revenues increased by 9%.

Third quarter operating results included a gain of approximately $100 million from the sale of a portion of an investment in Micron Technology, gains from divestitures of about $130 million and a restructuring charge of $98 million.

In a brief statement released ahead of a Q3 conference call, Intel chief executive officer Paul Otellini was quoted saying that "[Intel is] pleased with the results of the third quarter, with record mobile and server processor shipments, strong manufacturing execution, industry acclaim for our new products, and quad-core processors now extending our leadership this quarter."

Compared to the third quarter of 2005, processor revenues are still down, showing the impact of the ongoing price war with AMD. CPU revenues of the digital enterprise group were about $3.5 billion (down from $4.9 billion last year); mobile processors came in at $2.2 billion ($2.3 billion). For the first nine months, mobile processor revenues are slightly up to $6.5 billion ($6.3 billion for the first nine months of 2005), while enterprise CPUs (including desktop processors) are sharply down to $10.8 billion ($14.5 billion).

The mobility group continued to drive Intel's business: In the third quarter, the business unit achieved an operating income of $1.26 billion. The digital enterprise group brought in $858 million; the flash business lost $116 million and "other" negativa during the quarter amounted to $628 million.