14 DAY TRIAL // Last Friday, Santa Clara, California-based Intel posted its 2008 fourth quarter financial results, with the company recording an $8.2 million revenue and a profit of 4 cents a share, or a 90-percent drop from the $2.3 billion recorded in the fourth quarter of 2007. On that note, according to a recent report on Bloomberg, Intel is expected to post its first loss in 21-years of profitability. The news comes after an Intel internal memo ended up in the hands of fellows over at Bloomberg News.
“We are not going to wake up in six months with everything rosy again,” said Intel's chief executive officer, Paul Otellini, in the aforementioned memo to the company's employees. According to the memo, the first quarter of this year is “too close to call,” after 87 quarters of profitability.
The news is rather surprising, taking into consideration that Intel is by far the top maker of computer processors, leading the market way ahead of its competitors, such as AMD. It appears that the drop in consumer demand for personal computer systems has forced the company to run its factories below normal capacity, consequently operating with less profit. The news comes after the Santa Clara, California-based chip maker posted a 90-percent drop in Q4 2008 revenue.
Said memo also indicates that Intel employees prefer to endure paycuts instead of more drastic measures, which will include layoffs. According to the memo, people working at Intel aren't likely to receive merit pay or promotions in the near future, as the company's budget is expected to be planned down to every last cent. “We will be focusing on every nickel,” said Mr. Otellini, adding that “every dollar counts.”
The chip manufacturer is expected to continue investing in future technologies, but the company will slow down factory production and will be forced to close various sites and relocate some of its workforce. Intel shares fell 88 cents to $12.86 on Tuesday in Nasdaq Stock Market.