Intel reports revenues of US$9.5bn – but faces European lawsuit

16 Jul 2008

Microprocessor giant Intel last night reported a strong second quarter performance, with revenues of US$9.5bn and profits of US$1.6bn, which Intel president and CEO Paul Otellini attributed to strong demand for chips and chipset products in all geographies.

The strong results were shadowed by news, however, that European regulators are preparing to file new antitrust charges against Intel and plan to probe the company’s marketing and sales practices.

For the second quarter, Intel, which employs 5,000 people in Ireland, reported an operating income of US$2.3bn and a net income of US$1.6bn. Gross margin of 55.4pc was up from 53.8pc in the first quarter, but still below expectations due to lower than anticipated demand for microprocessors for lower-priced notebooks.

Restructuring costs of US$96m in the quarter were lower than previous expectations of US$250m.

Looking ahead to the third quarter, the company is predicting revenue of between US$10bn and US$10.6bn and enigmatically plans to spend US$2.9bn on mergers and acquisitions along with R&D.

“Intel had another strong quarter with revenue at the high end of expectations and earnings up substantially year over year,” said Paul Otellini.

“As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe,” he said.

However, the celebratory mood may be blighted by charges expected to be filed by European regulators this week, alleging Intel gave major European retailers inducements not to sell computers that contained chips from rival chipmakers like AMD.

A year ago the European Commission charged Intel with selling chips below cost and offering rebates.

AMD has accused Intel in the past of abusing its dominance of the US$280bn global chip market and filed a suit against the company in 2005.

Last month it emerged that Intel also faces a formal investigation by the US Federal Trade Commission.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years