Intel's Profit Skyrockets

Intel announced that its quarterly profit rose more than 40% over the last year's figures, reaching $1.3billion. It looks like the ongoing price war with AMD over the single and dual core processors left almost no scars as low selling prices were offset by higher than expected shipments.

Intel's revenues rose by 8% to $8.7 billion from $8 billion a year ago, but the gross margin was lower than the midpoint of expectations. In addition, one percentage was lost because of the lower sales of NOR flash products. Intel has plans to spin off this group and to combine it with ST Microelectronics's NOR operations. One factor in Intel's favor was the May launch of its Santa Rosa upgrade for the popular Centrino notebook and laptop PC platform, as the company shipped an improved processor, chipset and wireless card in order to maintain its large share of the market.

Strong sales of the quad core based Xeon processors designed for the server market, were saw by Intel, even if the company had some problems with the low-end consumer PC segment. In the flash memory segment, NAND chips sold very well, generating strong revenues and that helped boost the company's gross margin down to 49.6% for the quarter. Intel CFO Andy Bryant, cited by the news site InfoWorld, predicted that the company will increase both its gross margin and the profit during the next quarter.

Intel faces some tough challenges in the rest of 2007, as it will launch its new quad core desktop oriented processor Penryn as the same general time that its rival, AMD, will launch their own version of desktop designed quad core CPU named Phenom. Both chips will reach the hardware market at a time when most analyst firms expect to see little improvement over the effects of the DRAM price decline and the very price war between AMD and Intel.